need to be sold in order to earn a target profit of $600,000? (Igra taxes) 8. T+ following information is available for the Blue and Red Companies for 2005: Blue Red Sales (200,000 units) $1,800,000 $1,800,000 3 Variable costs 800.000 1.200,000 Contribution margin 1,000,000 600,000 Fixed costs 500,000 100,000 Net income S 500,000 $ 500,000 Required: A Compute the operating leverage for each company and explain what operating leverage measures B. 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