Magic Realm, Inc., has developed a new fantasy board game. The company sold 19,800 games last year at a selling price of $70 per game. Fixed expenses associated with the game total $297,000 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. 1-b. Compute the degree of operating leverage. 2. Management is confident that the company can sell 24,750 games next year (an increase of 4,950 games, or 25%, 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 Reg 1B Reg 2 Prepare a contribution format income statement for the game last year. Magic Realm, Inc. Contribution Income Statement O. WOL IS LIC CAPELLeuperLennyLICOSC Helper WCH VI TAYO!! 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 Reg 1B Reg 2 Prepare a contribution format income statement for the game last year. Magic Realm, Inc. Contribution Income Statement Total solen Variable expenses Contribution margin Fixed expenses Net operating income S Per Unit $ 70 50 0 $ 20 0 RA Reg 1B > 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 Req 18+ Reg 2 Compute the degree of operating leverage. Degree of operating loverago VIOLIS UIC Capelicu perenay HILI COSCIELOCITY ILUIHIC IVI HICAL YOL 5. 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 Reg 1B Reg 2 Management is confident that the company can sell 24,750 games next year (an increase of 4,950 games, or 25%, 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 % a. Net operating income increases by b. Total expected net operating income
