Barbour Corporation, located in Buffalo, New York, is a retailer of high-tech ...

Barbour Corporation, located in Buffalo, New York, is a retailer of hightech products and is known for its excellent quality and innovation. Recently, the rm conducted a relevant cost analysis of one of its product lines that has only two products, T1 and T2. The sales for T2 are decreasing and the purchase costs are increasing. The rm might drop T2 and sell only T-'l. Barbour allocates xed costs to products on the basis of sales revenue. When the president of Barbour saw the income statements {see below}, he agreed that T2 should be dropped. If T-2 is dropped, sales of T1 are expected to increase by 10% next year, but the nn's cost structure will remain the same. Sales Variable costs: Cost of goods sold Selling 3 administrative Contribution margin Fixed expenses: Fixed corporate costs Fixed selling and administrative Total fixed expenses Operating income T1 $285,600 37,399 27,399 $171,399 77,399 29,399 $196,399 $ 65,600 TZ $328,600 154,399 67,399 $ 97,399 92,399 313,399 $133,399 $93,399) Req u irecl: '1. Find the expected change in annual operating income by dropping T2 and selling only T1. 2. By what percentage would sales from T1 have to increase in order to make up the nancial loss from dropping T2? {Enter your answer as a percentage rounded to 2 decimal places [i.e. 0.1234 should be entered as 12.34\" 3. What is the required percentage increase in sales from T1 to compensate for lost margin from T2, iftotal xed costs can be reduced by $54,000? [Enter your answer as a percentage rounded to 2 decimal places [i.e. 0.1234 should be entered as 12.34\" 2. Required '75" Increase in sales of T 1 _