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A pants maker is designing a new line of pants called the

Question: 1. Fixed cost divided by the contribution margin ratio yields the

(a) break-even point in dollars,

(b) contribution margin per unit, or

2. A pants maker is designing a new line of pants called the Redbird. The pants will sell for $325 per pair and cost $260 per pair in variable costs to make.

(1) Compute the contribution margin per pair.

(2) Compute the contribution margin ratio.

(3) Describe what the contribution margin ratio reveals about this new pants line.

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