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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 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. Required: 1. Find the expected change in annual operating income by dropping T2 and selling only T1. 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 (i.e, 0.1234 should be entered as 12.34).) Required: 1. Find the expected change in annual operating income by dropping T2 and selling only T1. 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 $45,000 ? (Enter your answer as a percentage rounded to 2 decimal places (i.e. 0.1234 should be entered as (12.34).)

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