Exercise 6-15(Algo) Operating Leverage [LO6-2, LO6-3] Magic Realm, Incorporated, developed a new fantasy...
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Exercise Algo Operating Leverage LO LO Magic Realm, Incorporated, developed a new fantasy board game and sold units last year at a selling price of $ per game. Fixed expenses associated with the game are $ per year, and variable expenses are $ per game. Production of the game was outsourced to a printing contractor, so variable expenses consist mostly of payments to this contractor. Required: a Prepare a contribution format income statement for the game last year. b Compute the degree of operating leverage. Management is confident that the company can sell games next year an increase of games, or 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. Complete this question by entering your answers in the tabs below. Required Prepare a contribution format income statement for the game last year. 
Exercise Algo Operating Leverage LO LO
Magic Realm, Incorporated, developed a new fantasy board game and sold units last year at a selling price of $ per game.
Fixed expenses associated with the game are $ per year, and variable expenses are $ per game. Production of the game
was outsourced to a printing contractor, so variable expenses consist mostly of payments to this contractor.
Required:
a Prepare a contribution format income statement for the game last year.
b Compute the degree of operating leverage.
Management is confident that the company can sell games next year an increase of games, or 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.
Complete this question by entering your answers in the tabs below.
Required
Prepare a contribution format income statement for the game last year.
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