A jeans maker is designing a new line of jeans called Slims. The jeans will sell for $345 per pair and cost $262.20 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.

1. Contribution margin=$82.8

2. Contribution margin ratio=$82.8/$345=0.24

Explanation:

1. The contribution margin per pair of jeans shall be determine through following mentioned formula:

Contribution margin=Sale price of jeans per pair - variable costs of jeans per pair

=$345-$262.20

=$82.8

2. The contribution margin ratio per pair of jeans shall be determine through following mentioned formula:

Contribution margin ratio=Contribution margin/sale price of jeans per pair

Contribution margin ratio=$82.8/$345=0.24