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 1-2 and sell only 11 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 I-1 are expected to increase by 10% next year, but the firm's cost structure will remain the same. T-1 $275,000 T-2 $320,000 85, eee 25,000 $165 000 160,000 65,000 5.95,000 Sales Variable costs: Cost of goods sold Selling & administrative Contribution margin Fixed expenses: Fixed corporate costs Fixed selling and administrative Total fixed expenses Operating income 75,000 27,000 $102,000 $ 63,000 90,000 36,000 5126,00 $(31,000) 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 T-1 have to increase in order to make up the financial loss from dropping 1.27 (Enter your answer as a percentage rounded to 2 decimal places (ie. 0.1234 should be entered as 12.34):) 3. What is the required percentage increase in sales from 1-1 to compensate for lost margin from T 2. If total fixed costs can be reduced by $51,000? (Enter your answer as a percentage rounded to 2 decimal places (.e. 0.1234 should be entered as 12.34)) 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 T-1 have to increase in order to make up the financial loss from dropping 1-2? (Enter your answer as a percentage rounded to 2 decimal places (1.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 1-2. If total fixed costs can be reduced by $51,000? (Enter your answer as a percentage rounded to 2 decimal places (ie. 0.1234 should be entered as 12.34).) 9 2 3. Required % increase in sales of T.1 Required increase in sales from