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24 May, 06:34

Magic Realm, Inc., has developed a new fantasy board game. The company sold 47,500 games last year at a selling price of $67 per game. Fixed expenses associated with the game total $855,000 per year, and variable expenses are $47 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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  1. 24 May, 08:46
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    See the explanation below.

    Explanation:

    Magic Realm, Inc. Contribution Income Statement for last year

    Details Total ($) Per Unit ($)

    Sales revenue (47,500 * $67) 3,182,500 67

    Variable cost (47,500 * $47) (2,232,500) (47)

    Contribution 950,000 20

    Fixed expenses (855,000)

    Net operating expenses 95,000
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