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Magic Realm, Inc. has developed a new fantasy board game. The company sold 14,000 games...

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Accounting

Magic Realm, Inc. has developed a new fantasy board game. The company sold 14,000 games last year at a selling price of $21 per game. Fixed costs associated with the game total $182,000 per year, and variable costs are $6 per game. Production of the game is entrusted to a printing contractor. Variable costs consist mostly of payments to this contractor. Required: 1-a. Prepare an income statement for the game last year.

1-b. Compute the degree of operating leverage. (Round your answer to 2 decimal places.)

2. Management believes that the companys sales will increase by 2,520 games next year. Compute the following: a. The expected percentage increase in net income for next year. (Do not round intermediate calculations. Round your answers to the nearest whole percentage.)

b. The expected total dollar net income for next year. (Do not prepare an income statement; use the degree of operating leverage to compute your answer.) (Do not round intermediate calculations.)

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