A Standardized Recipe for a Menu Item Costs $73

question 32

Multiple Choice

A standardized recipe for a menu item costs $73.50 to produce and yields 15 portions. The menu item sells for $17.50. What is this item's contribution margin?

• A) $11.60
• B) $12.60
• C) $13.60
• D) $14.60

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Definitions:

Contribution Margin

The amount by which a product's selling price exceeds its total variable costs, contributing towards covering fixed expenses and generating profit.

Unit

A single, distinct item or entity that is a part of a larger group, system, or measure.

Break-Even Point

The point where the amount of goods produced or sold matches the total costs, leading to neither profit nor loss.

Contribution Format

An income statement format that separates fixed and variable costs, making it easier to see the contribution margin.