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A manufacturer is currently selling a product for $ 8 . 0 0 per unit. Its current variable costs are $ 3 . 5 0

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A manufacturer is currently selling a product for $8.00 per unit. Its current variable costs are $3.50. However, because of a new union contract, the product's variable costs will increase next month to $4.00. The manufacturer is considering lowering the product's price next month by 12.5%. What is the change in contribution margin that the manufacturer should use when calculating the breakeven sales level for this price change?
-$1.50
$3.50
$1.50
$2.00
-$1.00
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