Magic Realm, Incorporated, developed a new fantasy board game and sold $26,700$ units last year at a selling price of $\backslash (\backslash$$ $61\backslash )$ per game. Fixed expenses associated with the game are $\backslash (\backslash$$ $445,000\backslash )$ per year, and varlable expenses are $\backslash (\backslash$$ $41\backslash )$ per game. Production of the game was outsourced to a printing contractor, so varlable 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 $34,710$ games next year $($an Increase of $8,010$ games, or $\backslash (30\backslash \%\backslash ),$ 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.

Prepare a contribution format income statement for the game last year. Complete this question by entering your answers in the tabs below.

Required $1$ A

Required $\backslash (1\backslash$mid B $\backslash )$

Required $2$

Compute the degree of operating leverage.

Degree of operating leverage

Management is confident that the company can sell $34,710$ games next year $($an increase of $8,010$ games, or $30\backslash \%,$ 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.$)$