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In: Economics

Mcdonalds had sales revenues of 30 million USD in 2019. Its food ingredient is 15 million...

Mcdonalds had sales revenues of 30 million USD in 2019. Its food ingredient is 15 million USD. Its wage cost is 5 million USD, it paid 3 million USD in rent, 2 million USD in interest. What was its contribution (value-added) for 2019? How much profit did the owners of McDonalds make?

Expert Solution

In this question,

Sales = $30

Food ingredients = $15

Wage cost =$5

Rent = $3

Interest =$2

Then,

Contribution = Total sale - variable cost

According to this question,

Food ingredients of $15 is determined as variable cost and other expenses are fixed cost

Then, contribution would be = $30 - $15 = $15

And

Profit for the mcDonalds will be-

Sales - contribution - fixed cost (Rent, Interest, wages)

= $30 - $15 - ($3+$2+$5)

= $5.

Hence $5 will be profit for the mcDonalds

*( All the amount is in USD million)

Rahul Sunny answered 2 years ago

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