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Exercise 3-15 Operating Leverage (LO3-4, LO3-8] 2.000 per Magic Ream, Inc. has developed a new fantasy board game. The company sold 9.200 games last year at a selling price of 61 per game Fixed expenses assocne w the game year, and variable expenses are 541 per game Production of the game is entrusted to a printing contractor Variable expenses consist mosoy 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 Cost S 561 2001 561,200 S P O ENG /2019 Type here to search 1-b. Compute the degree of operating leverage. Degree of operating leverage 2. Management is confident that the company can sell 11,224 games next year (an increase of 2,024 games or 22% over last year). a. Compute the expected percentage increase in net operating income for next year. Net operating income increases by % Type here to search ot a 'e 9 2 Management is confident that the company can sel 11,224 games next year (an increase of 2,024 games, of 225 overlast year a compute the expected percentage increase in net operating income for next year Net operating income increases by 1% 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 References eBook & Resources Financial statements Dificulty 1 Easy Geaming Objective: 03.08 Compute the degree of operating leveage at a partir Type here to search a'e 9

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