Major E. has just opened a cooking school focusing on basic meals for new cooks.

Question

Major E. has just opened a cooking school focusing on basic meals for new cooks. Each student pays $15 per class and receives all the ingredients necessary to prepare dinner using the recipes demonstrated in the class. Major’s cost to provide the ingredients is $6 per student. In order to give his students hands-on help, Major employs two assistants and pays each of them $1,200 per month. Major’s monthly salary is $1,800. The depreciation on equipment is $1,000 per month and utilities and insurance are $240 per month. What is Major’s unit contribution margin?

Explanation / Answer

Unit contribution margin = Revenue per unit-Variable cost per unit

= 15-6

Unit contribution margi= $9

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