Contribution Margin and Contribution Margin Ratio For a recent year, Wicker Comp

Question

Contribution Margin and Contribution Margin Ratio

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

Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.

a. What is Wicker Company's contribution margin? Round to the nearest million. (Give answer in millions of dollars.)
$ million

b. What is Wicker Company's contribution margin ratio? Round to one decimal place.
%

c. How much would income from operations increase if same-store sales increased by $2,000 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.
$ million

Sales $33,400 Food and packaging $13,020 Payroll 8,400 Occupancy (rent, depreciation, etc.) 6,080 General, selling, and administrative expenses 4,900 $32,400 Income from operations $1,000

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Sales                    33,400.00 Variable Costs: Food and packaging                  13,020.00 Payroll                    8,400.00 General, selling, and administrative expenses = 4900 * 0.40                    1,960.00 Total Variable costs                  23,380.00 a) contribution margin = 33400 - 23380                  10,020.00 b) Contribution margin ratio = 10020/33400 30.00% c) If sales increase by 2000 m Income will increase by 2000 * 30% 600 M

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