Barbour Corporation, located in Buffalo, New York, 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 two products, T-1 and T.2. The sales for 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 statements (see below), he agreed that T-2 should be dropped. If T-2 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-1 $ 245,000 T-2 $ 296,000 79,000 19,000 $ 147,000 148,000 59,000 $ 89,000 Sales Variable costs: Cost of goods sold Selling & administrative Contribution margin Fixed expensest Fixed corporate costs Fixed selling and administrative Total fixed expenses Operating income 69,000 21,000 $ 90,000 $ 57,000 84,000 30,000 $ 114,000 $(25,000) Required: 1. Find the expected change in annual operating income by dropping 1-2 and selling only T-1. 2. By what percentage would sales from T-1 have to increase in order to make up the financial loss from dropping T-2 (Enter your answer as a percentage rounded to 2 decimal places (.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 T-2. If total fixed costs can be reduced by $53,000? (Enter your answer as a percentage rounded to 2 decimal places (ie. 0.1234 should be entered as 12.34).) 1 2 3 Net loss on discontinuing T-2 Required % increase in sales from T.1 Required % increase in sales from T. 1 % %