Magic Realm, Inc. has developed a new fantasy board game. The company sold $15,000$ games last year at a selling price of $$20$ per game. Fixed costs associated with the game total $$182,000$ per year, and variable costs are $$6$ per game. Production of the game is entrusted to a printing contractor. Variable costs consist mostly of payments to this contractor.

Required:

Prepare an income statement for the game last year and compute the degree of operating leverage.

Management is confident that the company can sell $18,000$ games next year $($an increase of $3,000$ games, or $20\%,$ over last year$).$ Compute:

a$.$ The expected percentage increase in net income for next year.

b$.$ The expected total dollar net income for next year.