For a recent year, McDonald's had the following sales and expenses (in millions):
|
Sales
|
$15,352
|
|
Food and packaging
|
$ 5,204
|
|
Payroll
|
4,040
|
|
Occupancy (rent, depreciation, etc.)
|
1,022
|
|
General, selling, and administrative expenses
|
2,220
|
|
|
$12,486
|
|
Income from operations
|
$ 2,866
|
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 two decimal places.
c. How much would income from operations increase if same-store sales increased by $450 million for the coming year, with no change in the contribution margin ratio or fixed costs?