Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

I multiplied 94k by 208%, what did I do wrong? Magic Realm, Inc., has developed a new fantasy board game. The company sold 37,600 games

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed I multiplied 94k by 208%, what did I do wrong?

Magic Realm, Inc., has developed a new fantasy board game. The company sold 37,600 games last year at a selling price of $66 per game. Fixed expenses associated with the game total $658,000 per year, and variable expenses are $46 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 47,376 games next year (an increase of 9,776 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.) Magic Realm, Inc. Contribution Income Statement Per Total Sales Variable expenses Contribution margin Fixed expenses Net operating income Unit s 2,481,600 $ 66 1,729,6046 752,000 20 658,000 S 94,000 Degree of operating leverage a. Net operating income increases by b. Total expected net operating income 208 % $ 195,520

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions