CH 11 Magic Realm, Inc., has developed a new fantasy board game. The company sold 30,000 games last year at a selling price of $60 per game. Fixed expenses associated with the game total $500,000 per year, and variable expenses are $40 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contractor. Required: 1-a. Prepare a contribution format income statement for the game last year. 1-b. Compute the degree of operating leverage. 2. Management is confident that the company can sell 36,900 games next year (an increase of 6,900 games, or 23%, over last year). Given this assumption: a. What is the expected percentage increase in net operating income for next year? b. What is the expected amount of net operating income for next year? (Do not prepare an income statement, use the degree of operating leverage to compute your answer) Complete this question by entering your answers in the tabs below. Reg LA Req 10 Req2 Prepare a contribution format income statement for the game last year, Magle Realm, Inc Contribution Income Statement Total Per Unit 0 $ 0 $ 0 Prim Magic Realm, Inc, has developed a new fantasy board game. The company sold 30,000 games last year at a selling price of $60 per game. Fixed expenses associated with the game total $500,000 per year, and variable expenses are $40 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contractor. Required: 1-a. Prepare a contribution format income statement for the game last year. 1-b. Compute the degree of operating leverage. 2. Management is confident that the company can sell 36,900 games next year (an increase of 6,900 games, or 23%, over last year). Given this assumption a. What is the expected percentage increase in net operating income for next year? b. What is the expected amount of net operating income for next year? (Do not prepare an income statement, use the degree of operating leverage to compute your answer) Complete this question by entering your answers in the tabs below. Reg 1A Reato Reg 2 Compute the degree of operating leverage. Dope of operating average Reg 1A Reg 13 Reg 2 Management is confident that the company can sell 36,900 games next year (an increase of 6,900 games, or 23%, over last year). Given this assumption: a. What is the expected percentage increase in net operating Income for next year? b. What is the expected amount of net operating income for next year? (Do not prepare an income statement; use the degree of operating leverage to compute your answer.) Show less Net operating income increases by b. Total expected not operating income Reg 10
