ncesExercise 6-15 (Algo) Operating Leverage [LO6-1, LO6-8]Magic Realm, Incorporated, has developed a new fantasy board game. The company sold 32,800 games last year at a selling price of$62 per game. Fixed expenses associated with the game total $574,000 per year, and variable expenses are $42 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.1-b. Compute the degree of operating leverage.2. Management is confident that the company can sell 41,656 games next year (an increase of 8,856 games, or 27%, 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 ofoperating leverage to compute your answer.)Complete this question by entering your answers in the tabs below.Req 1AReq 1BReq 2Prepare a contribution format income statement for the game last year.Magic Realm, Incorporated,Contribution Income StatementTotalPer Unit

Income statement is a financial statement that shows profitability, total revenue and total…

Answered: Magic Realm, Incorporated, has…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Juniper Design Limited of Manchester, England, provides design services to residential developers. Last year, the company had net operating income of $440,000 on sales of $1,700,000. The company's average operating assets for the year were $1,900,000 and its minimum required rate of return was 16%. Required: Compute the company's residual income for the year. Residual income
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