Magic Realm, Inc., has developed a new fantasy board game. The company sold 59,400 games last year at a selling price of $61 per game. Fixed expenses associated with the game total $1,089,000 per year, and variable expenses are $11 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contractor. a. Prepare a contribution format income statement for the game last year. b. Compute the degree of operating leverage.

Magic Realm, Inc., has developed a new fantasy board game. The company sold 59,400 games last year at a selling price of $61 per game. Fixed expenses associated with the game total $1,089,000 per year, and variable expenses are $11 per game. Production of the game is entrusted to a printing contractor. Variable expenses consist mostly of payments to this contractor. a. Prepare a contribution format income statement for the game last year. b. Compute the degree of operating leverage.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10EB: Keleher Industries manufactures pet doors and sells them directly to the consumer via their web...

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