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 $1,000 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 $16,300 Food and packaging $5,046 Payroll 4,100 Occupancy (rent, depreciation, etc.) 4,264 General, selling, and administrative expenses 2,400 $15,810 Income from operations $490

Explanation / Answer

Variable cost = 5046+4100+(2400*40%) = 10106

a) Contribution margin = 16300-10106 = 6194 million

b) Contribution margin ratio = 6194*100/16300 = 38%

c) Income from operation increase by = 1000*38% = 380 million

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.