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$2$

Magic Realm, Incorporated, developed a new fantasy board game and sold $17,000$ units last year at a selling price of $$69$ per game. Fixed expenses associated with the game are $$255,000$ per year, and variable expenses are $$49$ per game. Production of the game was outsourced to a printing contractor, so 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 $21,420$ games next year $($an increase of $4,420$ games, or $26\%,$ 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.

Req$1A$

Req $1$B

Req $2$

Prepare a contribution format income statement for the game last year.

$\backslash$table$[[$Magic Realm, Incorporated,$],[$Contribution Income Statement,,$],[,$Total,Per Unit$]]$