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(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,

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(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 $ 200,000 T-2 $ 260,000 70,000 20,000 5.110,000 130,000 50,000 $ 80,000 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 58,700 14,300 $23,000 $ 37,000 76,300 18,700 $ 95,000 (15,000) 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 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 T-1 to compensate for lost margin from T-2, if total fixed costs can be reduced by $45,000? (Enter your answer as a percentage rounded to 2 decimal places (.e. 0.1234 should be entered as 12.34).) 2 Required % increase in sales from T-1 3. Required % increase in sales from T-1 % %

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