Which of the following statements is true with respect to a company's effective tax rate reconciliation? a. the hypothetical tax expense is the tax that would be due if the company's statutory tax rate was applied to the company's net income from continuing operations. b. the hypothetical tax expense is the tax that would be due if the company's statutory tax rate was applied to the company's taxable income. c. the hypothetical tax expense is the tax that would be due if the company's statutory tax rate was applied to the company's book equivalent of taxable income. d. the hypothetical tax expense is another name for the company's effective tax rate

Magic realm, inc., has developed a new fantasy board game. the company sold 15,000 games last year at a selling price of $20 per game. fixed expenses associated with the game total $182,000 per year, and variable expenses are $6 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 58,880 games next year (an increase of 12,880 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.)