Response to the following problem:
For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):
Sales $16,083
Food and packaging $ 5,350
Payroll 4,185
Occupancy (rent, depreciation, etc.) 4,006
General, selling, and administrative expenses 2,340
$15,881
Income from operations $ 202
Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.
(a) What is McDonald's contribution margin? Round to the nearest million.
(b) What is McDonald's contribution margin ratio? Round to one decimal place.
(c) How much would income from operations increase if same-store sales increased by $500 million for the coming year, with no change in the contribution margin ratio or fixedcosts?