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Ham and Potato Au Gratin

1 1/2 c. diced cooked ham
3 c. diced cooked potato
4 tbs butter or margarine
1 med. chopped onion
3 tbs flour
2 c. milk
Salt & pepper to taste
1/ 2 c. graded sharp Cheddar Cheese

Layer the ham and potatoes in shallow 1 ½ quart baking dish. Melt the butter in sauce pan. Add onion and cook till golden. Blend in flour; add milk gradually and cook, stirring constantly till thickened. Season with salt & pepper. Pour over ham/potato mix and sprinkle with cheese. Dot with remaining butter. Bake at 400 for 20-25 min. Serves 4 generously.