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Magic Realm, Inc., has developed a new fantasy board game. The company sold 43,500 games last year a a selling price of $70 per game.
Magic Realm, Inc., has developed a new fantasy board game. The company sold 43,500 games last year a a selling price of $70 per game. Fixed expenses associated with the game total $783,000 per year, and variable expenses are $50 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. Magic Realm, Inc., Contribution Income Statement Total 1-b. Compute the degree of operating leverage. Degree of operating leverage 2. Management is confident that the company can sell 52,635 games next year (an increase of 9,135 games, or 21%, over last year) a. Compute the expected percentage increase in net operating income for next year. Net operating income increases by
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