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The following is financial information relative to two companies in the same industry:

Category	Alpha	Omega
Sales	$10,000,000	$10,000,000
Variable Cost	5,000,000	2,000,000
Contribution Margin	5,000,000	8,000,000
Fixed Costs	3,000,000	6,000,000
Operating Income	$2,000,000	$2,000,000

Calculate the operating leverage for each firm.

If sales increased 10% for each firm, the variable cost per unit did not change, and the fixed costs did not change, what would be the change in operating income?

If sales decreased 20% for each firm, the variable cost per unit did not change, and the fixed costs did not change, what would be the change in operating income?

Discuss the nuances of operating leverage and its relation to risk.