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16 October, 09:35

A jeans maker is designing a new line of jeans called the Slims. The jeans will sell for $335 per pair and cost $261.30 per pair in variable costs to make. (Round your answers to 2 decimal places.)

(1) Compute the contribution margin per pair.

(2) Compute the contribution margin ratio.

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Answers (2)
  1. 16 October, 09:41
    0
    Part (1) Compute the contribution margin per pair.

    contribution margin $73.70

    Part (2) Compute the contribution margin ratio.

    contribution margin ratio 22%

    Explanation:

    Part (1) Compute the contribution margin per pair.

    contribution margin = Selling Price - Variable Costs

    = $335.00 - $261.30

    = $73.70

    Part (2) Compute the contribution margin ratio.

    contribution margin ratio = Contribution/Selling Price * 100

    = $73.70 / $335.00 * 100

    = 22%
  2. 16 October, 09:54
    0
    Answer: $73.70, 22%

    Explanation:

    Given the following;

    Selling price per pair = $335

    Variable cost per pair = $261.30

    The contribution margin is calculated to find the amount by which revenue exceed variable cost.

    Therefore, the contribution margin per pair of Jean is given by;

    Selling price per pair - variable cost per pair

    $335 - $261.30 = $73.70

    b. The contribution margin ratio is given by;

    (Total revenue - variable cost) : total revenue

    (($335 - $261.30) : $335) * 100

    ($73.70 : $335) * 100 = 22%
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