Magic Realm, Incorporated, developed a new fantasy board game and sold $27,900$ units last year at a selling price of $$65$ per game. Fixed expenses associated with the game are $$465,000$ per year, and variable expenses are $$45$ per game. Production of the game was outsourced to a printing contractor, so 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 $35,433$ games next year $($an increase of $7,533$ games, or $27\%,$ 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.$)$

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Req $2$

Management is confident that the company can sell $35,433$ games next year $($an increase of $7,533$ games, or $27\%,$ 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.$)$

$\backslash$table$[[$a$.$ Net operating income increases by$,\%$