# Eco 561 Business Proposal for Mcdonalds

1242 words 5 pages

ECO/561
February 3, 2012

McDonalds Business Proposal McDonalds has always been a company that shares in the happiness of a child. Recently after taking my own children to McDonalds, I have found that there is not a breakfast option for children. McDonalds should add a happy meal option to the breakfast menu. Current demands by consumers are to add a happy meal option allowing parents to purchase child sized portions of breakfast items. This option could help McDonalds to increase profits by attracting more consumers. Shareholder reports show a quarterly cash dividend per share increase of 15% and annual dividend of \$2.80 per share. Comparable sales grew 5.6%. Cash by operations increased \$808
How Could You Use the Concepts of Marginal Costs and Marginal Revenue to Maximize Profits? What Information Do You Need to Determine This? Without This Information, How Would You Make a Decision? * Determine the profit at each level of sales. As sales increase, account for labor costs, quantity discounts, increased shortage (loss, theft and breakage) and other variable costs. * Determine the marginal profit at each incremental increase in sales. Marginal profit is defined as the change in profit for each additional unit sold. * Determine the profit maximizing quantity. This is the point before marginal profit becomes negative. Why? It is likely that the more items sold, the higher variable costs are. Variable costs include labor, commissions, raw materials and shortage. In addition, when large quantities are sold to one party, a quantity discount is often given, resulting in lower per-unit revenue. * Determine where expenses could be lessened and revenue could be increased to optimize sales. Marginal analysis is not static (eHow.com, 2013). * \$3@50 = \$150, \$3@70 = 250, \$3@90 = \$550, \$3@110 = \$500 -50 negative marginal profit. * Without this information, you are taking a guess on the decision causing potential risk.
Pricing and Non-Pricing Strategies * Price is one of the essential elements of the four P’s of marketing, which include price, promotion,

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