Magic Realm, Inc. has developed a new fantasy board game. The company sold 15,000 gameslast year at a selling price of $20 per game. Fixed costs associated with the game total $182,000per year, and variable costs are $6 per game. Production of the game is entrusted to a printingcontractor. Variable costs consist mostly of payments to this contractor.Required:1.2.Prepare an income statement for the game last year and compute the degree of operatingleverage.Management is confident that the company can sell 18,000 games next year (an increaseof 3,000 games, or 20%, over last year). Compute:a.b.The expected percentage increase in net income for next year.The expected total dollar net income for next year.

1. Income Statement for Last Year:Sales Revenue: 15,000 games * $20/game = $300,000Variable…

Answered: Magic Realm, Inc. has developed a new…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

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Magic Realm, Inc., has developed a new fantasy board game. The company sold 15,000 games last year ata selling price of $20 per game. Fixed costs associated with the game total $182,000 per year, and variablecosts are $6 per game. Production of the game is entrusted to a printing contractor. Variable costs consistmostly of payments to this contractor.Required:1. Prepare a contribution format income statement for the game last year and compute the degree ofoperating leverage.2. Management is confident that the company can sell 18,000 games next year (an increase of 3,000games, or 20%, over last year). Compute:a. The expected percentage increase in net operating income for next year.b. 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.)
Magic Realm, Incorporated, has developed a new fantasy board game. The company sold 60,000 games last year at a selling price of $60 per game. Fixed expenses associated with the game total $1,100,000 per year, and variable expenses are $40 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contractor. Required: 1-a. Prepare a contribution format income statement for the game last year.
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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). 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. Req 1A Req 1B Req 2…
Magic Realm, Incorporated, developed a new fantasy board game and sold 47,500 units last year at a selling price of $66 per game. Fixed expenses associated with the game are $855,000 per year, and variable expenses are $46 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 61,750 games next year (an increase of 14,250 games, or 30%, 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. Req 1A Req 1B Req 2…
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Please help with 2A and 2B. I can't seem to figure those out. The other parts of the question I have completed. Magic Realm, Incorporated, has developed a new fantasy board game. The company sold 47,000 games last year at a selling price of $69 per game. Fixed expenses associated with the game total $846,000 per year, and variable expenses are $49 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contractor. 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 58,280 games next year (an increase of 11,280 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 not prepare an income statement; use the degree of operating leverage to…
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