Though the index is often lauded for its simplicity in understanding, there are also limitations such as the failure to account for distortions caused by transport costs, taxes, labour laws, levels of competition, and trade barriers. Still, the way the Big Mac Index works is noteworthy as a straight forward method of comparison, and has widely become accepted as a comparison tool.
Check out this infographic, which explores the mechanics of the Big Mac Index, as well as the implications from the index in 2011.
Via: Online MBA Blog