help please

8. The following information is available for the Blue and Red Companies for 2005: Blue Red Sales (200,000 $1,800,000 $1,800,000 units) Variable 800,000 1,200,000 costs Contribution 1,000,000 600,000 margin Fixed costs 500,000 100,000 Net income $ 500,000 $ 500,000 Required: A. Compute the operating leverage for each company and explain what operating leverage measures. If both companies experience a 20% increase in sales volume, will they continue to have the same net income? Why or why not? Explain your answer with respect to each company's operating leverage. B