11-27 (Product-line Drop/keep) Barbour Corporation, located in Buffalo, New Your, is a retailer of high-tech products and is known for its excellent quality and innovation. Recently, the firm conducted a relevant cost analysis of one of its product lines that has only tow products T-1 and T-2. The sales of T-2 are decreasing and the purchase costs are increasing. The firm might drop T-2 and sell only T-1. Barbour allocates fixed costs to products on the basis of sales revenue. When the president of Barbour saw the income statement (see below), he agreed with T-2 should be dropped. If T-2 is dropped, sales of T-1 are expected to increase by 10% next year, but the firms cost structure will remain the same. Sales Variable Costs: Cost of good sold Selling \& Adm. Contribution margin Fixed expenses: Fixed corporate costs Fixed selling and Adm. total fixed expenses Operating income \begin{tabular}{|r|r|r|} \hline \multicolumn{1}{|c|}{ T-1 } & \multicolumn{1}{|c|}{ T-2 } & \\ \hline$200,000 & $260,000 & \\ \hline 70,000 & 130,000 & \\ \hline 20,000 & 50,000 & \\ \hline$110,000 & $80,000 & \\ \hline & & \\ \hline$60,000 & $75,000 & \\ \hline 12,000 & 21,000 & \\ \hline$72,000 & $96,000 & total \\ \hline$38,000 & (16,000) & $22,000 \\ \hline \end{tabular} 4) If $45,000 of fixed costs could be avoided, how much would T-1 sales have to increase