Question

For a recent year, McDonald's Company-owned restaurants had the following sales and expenses (in millions):

Sales	$32,300
Food and packaging	$11,984
Payroll	8,100
Occupancy (rent, depreciation, etc.)	6,546
General, selling, and administrative expenses	4,700
	$31,330
Income from operations	$970

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. (Give answer in millions of dollars.)
$ million

b. What is McDonald's contribution margin ratio?
%

c. How much would income from operations increase if same-store sales increased by $1,900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.
$ million

Answer 1