Question

A jeans maker is designing a new line of jeans called Slims. The jeans will sell...

A jeans maker is designing a new line of jeans called Slims. The jeans will sell for $275 per pair and cost $165.00 per pair in variable costs to make. (Round your answers to 2 decimal places.)

(1) Compute the contribution margin per pair.
Sales $275.00 per pair
Variable cost 165.00 per pair
Contribution margin $110.00 per pair
(2) Compute the contribution margin ratio.
Choose Numerator: / Choose Denominator: = Contribution Margin Ratio
Contribution margin per unit / Selling price per unit = Contribution margin ratio
$110.00 / 0
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Homework Answers

Answer #1

(1) Computation of Contribution Margin per pair:-

Contribution Margin per pair is calculated by Subtracting Variable Cost per pair from Selling price per pair.

Contribution Margin per pair=(Selling price per pair- Variable Cost per pair)

=($275-$165)

=$110

So Contribution Margin per pair is $110.

(2) Computation of Contribution Margin Ratio:-

Contribution Margin Ratio is calculated Contribution Margin per unit divided by Selling price per unit.

Contribution Margin Ratio=(Contribution Margin per pair/Selling Price per pair)×100

=($110/$275)×100

=40%

So Contribution Margin Ratio is 40%.

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