A nutrition enthusiast is weighing the pros and cons of keeping a few chickens in his backyard, reasoning that eggs that he doesn’t eat he can sell to friends and neighbors. One trip to his local hardware store later, he returns with $630.00 worth of lumber, paint and carpet and a weekend of fun assembling a chicken coop. He starts small, and invests another $21.00 in two barred rock and two buff Orrington hens. A 50-pound sack of layer pellets costs $16.20 and water is essentially free. It takes four hens a month to work their way through the sack of feed and during that time he collects and sells 97 eggs at $4.70 per dozen.
a) What is the contribution margin to the fixed cost generated per month?
b) How many months will pass before he realizes a profit from this business?
c) If he wishes to make profit after 6 months what should be the selling price per dozen eggs?