Green Valley Corp.'s contribution format income statement for the most recent month follows:

Sales	$	506,000
Variable expenses		236,500
Contribution margin		269,500
Fixed expenses		241,700
Net operating income	$	27,800

Required:

a. Compute the degree of operating leverage to two decimal places.

b. Using the degree of operating leverage, estimate the percentage change in net operating income that should result from a 3% increase in sales.

c. If Green Valleys competitor Black Mountain Inc. has a degree of operating leverage as 8, which company has the higher operating risk?