Magic Realm, Incorporated, developed a new fantasy board game and sold 24,600 units last year at...

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Magic Realm, Incorporated, developed a new fantasy board game and sold 24,600 units last year at a selling price of $64 per game. Fixed expenses associated with the game are $410,000 per year, and variable expenses are $44 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. 2. Management is confident that the company can sell 30,750 games next year (an increase of 6,150 games, or 25%, 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, Incorporated, developed a new fantasy board game and sold 24,600 units last year at a selling price of $64 per game. Fixed expenses associated with the game are $410,000 per year, and variable expenses are $44 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. 2. Management is confident that the company can sell 30,750 games next year (an increase of 6,150 games, or 25%, 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.)

Answer rating: 100% (QA)

1a Contribution Format Income Statement for Last Year Units Sold 24600 Selling Price per Unit 64 Var... View the full answer