Magic Realm, Inc., has developed a new fantasy board game. The company sold 48,000 games last...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Magic Realm, Inc., has developed a new fantasy board game. The company sold 48,000 games last year at a selling price of $61 per game. Fixed expenses associated with the game total $864,000 per year, and variable expenses are $41 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. 2. Management is confident that the company can sell 58,560 games next year (an increase of 10,560 games, or 22%, 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.) Magic Realm, Inc., has developed a new fantasy board game. The company sold 48,000 games last year at a selling price of $61 per game. Fixed expenses associated with the game total $864,000 per year, and variable expenses are $41 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. 2. Management is confident that the company can sell 58,560 games next year (an increase of 10,560 games, or 22%, 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.)
Expert Answer:
Related Book For
Managerial Accounting
ISBN: 978-0077522940
15th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
Students also viewed these accounting questions
-
Magic Realm, Inc., has developed a new fantasy board game. The company sold 15,000 games last year at a selling price of $ 20 per game. Fixed expenses associated with the game total $ 182,000 per...
-
Magic Realm, Inc., has developed a new fantasy board game. The company sold 25,200 games last year at a selling price of $62 per game. Fixed expenses associated with the game total $420,000 per year,...
-
Magic Realm, Ic., has developed a new fantasy board game. The company sold 41,500 games last year at a selling price of $63 per game. Fixed expenses associated with the game total $747,000 per year,...
-
Read the article Somatoform and Related Disorders: An Update which address personality disorders, substance abuse, as any of these behaviors are often considered to be predictors of crime and/or...
-
On June 30, 2011, Sampras Company reported the following account balances: On June 30, 2011, Pelham paid $300,000 cash for all assets and liabilities of Sampras, which will cease to exist as a...
-
If c 0, verify that the function defined by y(x) x/(cx - 1) (with the graph illustrated in Fig. 1.3.26) sat- isfies the differential equation x 2 y' + y 2 = 0 if x 1/c. Sketch a variety of such...
-
Explain the components of the path evaluation function f(node) used by A*. Do you think it is the best evaluation function that could be used? To what kinds of problems might it be best suited? And...
-
Lincolnville Company uses an imprest petty cash system. The fund was established on March 1 with a balance of $100. During March the following petty cash receipts were found in the petty cash box....
-
To discover whether an unknown gas is monatomic or diatomic, an experimenter takes a 2.0 L sample of the gas at STP and heats this sample to 100C at constant volume. (a) The gas absorbs 180 J of...
-
Solve Problem 3.33 in Chapter 3 to construct an x-bar chart in conjunction with an R-chart for delivery time at the Great Outdoors Clothing Company. Data in Problem 3.33 in Chapter 3 The Great...
-
When has Equity Theory caused you to lower your efforts in the workplace? Explain how this happened referring to the theory?
-
1. From a line manager: I attach a collage of job advertisements that prove my contention that we are seriously underpaying my key staff. How do you reply? 2. From the HR director to the head of...
-
Briefly describe the importance of trust,collegiality,fairness and accountability in research collaborations. Explanation and conclusion please
-
3. Long-Term Financial Decision - Breakeven Point Strong Key Pte.Ltd., manufactures a key for houses with the selling price $7/per unit. Each key has variable cost per unit $4, Fixed Cost $60.000/per...
-
Each year a company receives $3.5 million, at the end of the year. For the first 3 years an interest rate of 8% will apply, for the last 2 years an interest rate of 11% will apply. a) What is the...
-
Chi-Square Tests Exact Sig. (2- sided) Asymptotic Significance (2-sided) .004 Exact Sig. (1- sided) Value df 8.286 a 1 6.547 1 .011 8.634 1 .003 Pearson Chi-Square Continuity Correction Likelihood...
-
If the goal of monetary policy is to keep interest rates stable, the Federal Reserve's response to increases in the demand for money will be to Select one: a. decrease the supply of money. b....
-
Classify each of the following as direct costs or indirect costs of operating the Pediatrics ward for children at the Cleveland Clinic: a. Wi-Fi covering the entire hospital campus b. Net cost of...
-
As a form of internal control, what documents would you review prior to paying an invoice received from a supplier?
-
Exhibit 12 includes 12 questions related to 12 types of decisions that companies often face. In the chapter, these 12 decisions were discussed within the context of for- profit companies; however,...
-
Refer to the data for the Ferre Publishing Company in Exercise 4B3. In Exercise 4B3, The Ferre Publishing Company has three service departments and two operating departments. Selected data from a...
-
Determine the slope at \(B\) and displacement at \(C . E I\) is constant. W W C02 312
-
The two bars are pin connected at \(D\). Determine the slope at \(A\) and the displacement at \(D\). \(E I\) is constant. B 212 L2
-
Determine the slope at \(C\) and displacement at \(B\). \(E I\) is constant. A a W B
Study smarter with the SolutionInn App