A menu item sells for $8.00, has a food cost of 25%, and it is sold to 100 guests. What is the item's total contribution margin?

Question

Quizplus · Accepted Answer

The contribution margin is the selling price minus the cost of goods sold. Here, the cost is 25% of $8.00, which is $2.00. Therefore, the contribution margin per item is $8.00 - $2.00 = $6.00. For 100 guests, the total contribution margin is 100 * $6.00 = $600.

A Menu Item Sells for $8