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, T-1 and T2. The sales for T2 are decreasing and the purchase costs are increasing. The firm might drop T2 and sell only T1. 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 T-2 should be dropped. If T2 is dropped, sales of T-1 are expected to increase by 10 percent next year, but the firm's cost structure will remain the same. T-l T-Z Sales 5 260,000 $ 308,000 Variable costs: Cost of goods sold 82,000 154,000 Selling & administrative 22,000 62,000 Contribution margin 5 156,000 $ 92,000 Fixed expenses: Fixed corporate costs 72,000 87,000 Fixed selling and administrative 24,000 33,000 Total fixed expenses $ 96,000 $ 120,000 Operating income $ 60,000 $ (28,000) Required: 1. Find the expected change in annual operating income by dropping T-2 and selling only T-1. 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 T-1 to compensate for lost margin from T2, if total xed costs can be reduced by $46,500? (Enter your answer as a percentage rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34).) Required % increase in sales from T-1 Required % increase in sales from T-1