Contribution Margin and Contribution Margin Ratio For a recent year, McDugal's company-owned restaurants had the following...
Contribution Margin and Contribution Margin Ratio
For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions):
| Sales | $36,800 | |
| Food and packaging | $9,672 | |
| Payroll | 9,800 | |
| Occupancy (rent, depreciation, etc.) | 11,728 | |
| General, selling, and admin. expenses | 5,600 | |
| Other expense | 740 | |
| Total expenses | (37,540) | |
| Operating income (loss) | $(740) |
Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.
a. What would have been the operating income or loss for the
recent year if sales had been $2,200 million more?
$ ______ million
b. To achieve break even for the recent year, by how much would
sales need to increase? Enter your anwer in million rounded to the
nearest whole number.
$ _______ million
Homework Answers
Variable cost = 9672+9800+(5600*40%) = 21712
Contribution margin ratio = (36800-21712)/36800 = 41%
a) Net operating income = (2200*41%-740) = 162 Million
b) Break even sales = 15828/.41 = 38605
Increase = 38605-36800 = 1805 Million
Add Answer to:
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