Exercise 5-15 Operating Leverage [LO5-4, LO5-8] Magic Realm, Inc., has developed a new fantasy board game. The company sold 41,000 games last year at a selling price of $66 per game. Fixed expenses associated with the game total $738,000 per year, and variable expenses are $46 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. Magic Realm, Inc., Contribution Income Statement Total Per Unit 1-b. Compute the degree of operating leverage. Degree of operating leverage 2. Management is confident that the company can sell 51,250 games next year (an increase of 10,250 games, or 25%, over last year). a. Compute the expected percentage increase in net operating income for next year. % Net operating income increases by b. Compute the expected total dollar net operating income for next year. (Do not prepare an income statement; use the degree of operating leverage to compute your answer.) Total expected net operating income