Magic Realm, Incorporated, has developed a new fantasy board game. The companysold 18,400 games last year at a selling price of $67 per game. Fixed expensesassociated with the game total $276,000 per year, and variable expenses are $47 pergame. Production of the game is entrusted to a printing contractor. Variable expensesconsist mostly of payments to this contractor.Required:1-a. Prepare a contribution format income statement for the game last year.1-b. Compute the degree of operating leverage.2. Management is confident that the company can sell 22,816 games next year (anincrease of 4,416 games, or 24%, over last year). Given this assumption:a. What is the expected percentage increase in net operating income for next year?b. What is the expected amount of net operating income for next year? (Do notprepare an income statement; use the degree of operating leverage to compute youranswer.)Complete this question by entering your answers in the tabs below.Req 1AReq 1BReq 2Prepare a contribution format income statement for the game last year.Magic Realm, IncorporatedContribution Income Statement$TotalPer Unit0 $00

The income statement commonly referred to as the profit and loss account, is a crucial financial…

Answered: Required: 1-a. Prepare a contribution…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Magic Realm, Incorporated, has developed a new fantasy board game. The company sold 26,400 games last year at a selling price of $64 per game. Fixed expenses associated with the game total $440,000 per year, and varlable expenses are $44 per game. Production of the game is entrusted to a printing contractor. Varlable 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 33,792 games next year (an increase of 7,392 games, or 28%, over last year). Glven 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 1B Req 2…
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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 year, and variable expenses are $6 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contractor.Required:1. Prepare a contribution format income statement for the game last year and compute the degree of operating leverage.2. Management is confident that the company can sell 18,000 games next year (an increase of 3,000 games, or 20%, 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.)
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Required: 1-a. Prepare a contribution format income statement for the game last year.