Magic Realm, Incorporated, has developed a new fantasy board game. The company

sold $18,400$ games last year at a selling price of $$67$ per game. Fixed expenses

associated with the game total $$276,000$ per year, and variable expenses are $$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.

Management is confident that the company can sell $22,816$ games next year $($an

increase of $4,416$ games, or $24\%,$ 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.

Req $1A$

Req $1$B

Req $2$

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