Professor Elam

Thursday June 20, 2024

McDonald's rolls out its $5 Meal Deal to combat perceptions of high prices.

This is a classic example of cost accounting. Franchises say it will decrease larger sales and offer low margins for them. MCD is betting its scale of size with  13,700 restaurants, gives it buying power so that adding fries and  a drink keeps cost low. Other fast food spots are joining the fray. This real world case illustrates the importance of knowing break even cost and volume, something learned in cost accounting.