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T This is one whole problem that I need help with. Thanks. Saitama Amusements Corporation places electronic games and other amusement devices in supermarkets and
T
This is one whole problem that I need help with. Thanks.
Saitama Amusements Corporation places electronic games and other amusement devices in supermarkets and similar outlets throughout Japan. Saitama Amusements is investigating the purchase of a new electronic game called Mythical Marauders. The manufacturer will sell 20 games to Saitama Amusements Saitama Amusements has determined the following additional information about the game a. The game would have a five-year useful life and a negligible salvage value. The company uses straight ne depreciation. b. The game would replace other games that are unpopular and generating little revenue. These other games would be sold for a total of 23,000. c. Saitama Amusements estimates that Mythical Marauders would generate annual incremental revenues of 215,000 (total for all 20 games). Annual incremental out-of-pocket costs would be (in total): maintenance, *46,000; and insurance, *8,600. In addition, Saitama Amusements would have to pay a commission of 43% of total revenues to the supermarkets and other outlets in which the games were placed. (Ignore income taxes.) Required: 1. Prepare a contribution format income statement showing the net operating income each year from Mythical Marauders. Saitama Amusements Corporation Fixed expenses: Total fixed expensesStep by Step Solution
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