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not sure on any of three parts Barbour Corporation, located in Buffalo, New York, is a retailer of high-tech products and is known for its
not sure on any of three parts
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, T1 and T2. The sales for T2 are decreasing and the purchase costs are increasing. The firm might drop T-2 and sell only T1. 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 T2 is dropped, sales of T-1 are expected to increase by 10 percent next year, but the firm's cost structure wil remain the same. 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 T-2? (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, if total fixed costs can be reduced by $57,000 ? (Enter your answer as a percentage rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34 ).) Step by Step Solution
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