Magic Realm, Inc., has developed a new fantasy board game. The company sold 18,000 games last year at a selling price of $67 per game. Fixed expenses assoclated with the game total $270,000 per year, and varlable expenses are $47 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contracto r. 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 23,040 games next year (an Increase of 5,040 games, or 28 %, 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 ansv swers in the tabs below. Req 1B Req 2 Req 1A Prepare a contribution format income statement for the game last year. Magic Realm, Inc. Contribution Income Statement Total Per Unit Req 1B Reg 1A Magic Realm, Inc., has developed a new fantasy board game. The company sold 18.000 games last year at a selling price of $67 per game. Flxed expenses assoclated with the game total $270,000 per year, and varlable expenses are $47 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 23,040 games next year (an Increase of 5,040 games, or 28 % , over last year) Glven 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 2 Reg 1A Req 1B Compute the degree of operating leverage. Degree of operating leverage Req 2 Req 1A Magic Realm, Inc., has developed a new fantasy board game. The company sold 18,000 games last year at a selling price of $67 per game. Flxed expenses associated with the game total $270,000 per year, and varlable expenses are $47 per game. Production of the game Is entrusted to a printing contractor. Varlable expenses consist mostly of payments to this contractor. Required: 1-a. Prepare a contributlon 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 23,040 games next year (an Increase of 5,040 games, or 28 % , over last year) Glven 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 ans nswers in the tabs below. Req 2 Req 1A Req 1B Management is confident that the company can sell 23,040 games next year (an increase of 5,040 games, or 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 of operating leverage to compute your answer.) 28%, over last in come statement; use the degree Show less Net operating income increases by % a. b. Total expected net operating income Req 1B Req 2
