Magic Realm, Incorporated, developed a new fantasy board game and sold $29,100$ units last year at a selling price of $$62$ per

game. Fixed expenses associated with the game are $$485,000$ per year, and variable expenses are $$42$ 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.

Management is confident that the company can sell $36,957$ games next year $($an increase of $7,857$ 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.$)$

Complete this question by entering your answers in the tabs below.

Prepare a contribution format income statement for the game last year.