Check Tipton One-Stop Decorating sells paint and paint supplies, carpet, and wallpaper at a single-store location in suburban Des Moines Although the company has been very profitable over the years, management has seen a significant decline in wallpaper sales and earnings. Much of this decline is attributable to the Internet and to companies that advertise deeply discounted prices in magazines and offer customers free shipping and toll-free telephone numbers. Recent figures follow Paint and Supplies $380,000 $228,000 Carpeting Wallpaper $460,000 140,000 $322,000 112,000 75,00045:900 $284,90e$397,00e157,000 Sales Variable costs Fixed costs Total costs Operating income (loss) 56,000 $ 96,000 $ 63,000 , (17,000) Tipton is studying whether to drop wallpaper because of the changing market and accompanying loss. If the line is dropped, the following changes are expected to occur: The vacated space will be remodeled at a cost of $12,400 and will be devoted to an expanded line of high-end carpet. Sales of carpet are expected to increase by $120,000, and the line's overall contribution margin ratio will rise by five percentage points Tipton can cut wallpaper's fixed costs by 40 percent. Remaining fixed costs will continue to be incurred Customers who purchased wallpaper often bought paint and paint supplies. Sales of paint and paint supplies are expected to fall by 20 percent. The firm will increase advertising expenditures by $25,000 to promote the expanded carpet line Required 1-a. Calculate the income or loss if Tipton closes its wallpaper operation 1-b. Should Tipton close its wallpaper operation? 2. Assume that Tipton's wallpaper inventory at the time of the closure decision amounted to $23,700. How would you have treated this additional information in making the decision? 3. What advantages might Internet-and magazine-based firms have over Tipton that would allow these organizations to offer deeply discounted prices-prices far below what Tipton can offer? Complete this question by entering your answers in the tabs below Req 2 Req 3 Req 1A Req 18 Calculate the income or loss if Tipton closes its wallpaper operation Required: 1-a. Calculate the income or loss if Tipton closes its wallpaper operation. 1-b. Should Tipton close its wallpaper operation? 2. Assume that Tipton's wallpaper inventory at the time of the closure decision amounted to $23,700. How would you have treated this additional information in making the decision? 3. What advantages might Internet- and magazine-based firms have over Tipton that would allow these organizations to offer deeply discounted prices-prices far below what Tipton can offer? Complete this question by entering your answers in the tabs below. Req 3 Req 1A Req 18 Req 2 Assume that Tipton's wallpaper inventory at the time of the closure decision amounted to $23,700. How would you have treated this additional informatio making the decision? This cost is important. The revenue generated from the sale of this inventory is relevant to the closure decision. This cost should be ignored. The inventory cost is sunk. Regardless of whether the department is closed, Tipton will have a wallpaper inventory of $23,700. Req 1B Req 3 3. What advantages might Internet- and magazine-based firms have over Tipton that would allow these organizations to offer deeply discounted prices-prices far below what Tipton can offer? Complete this question by entering your answers in the tabs below. Req 2 Req 1A Req 1B Req 3 What advantages might Internet- and magazine-based firms have over Tipton that would allow these organizations to offer deeply discounted prices-prices far below what Tipton can offer? (Select which of the following statements (is) are true by selecting an "X".) These companies probably carry little or no inventory. When a customer places an order, the firm simply calls its supplier and acquires the goods. The result may be lower expenditures for storage and warehousing These firms do not need retail space for walk-in customers. Internet- and magazine-based firms can conduct business globally. Tipton, on the other hand, is confined to a single store in Des Moines. nternet and magazine-based firms have the advantage of point-of-purchase displays and personalized selling Internet and magazine-based firms could have access to means of financing that Tipton might not. Req 2 Req 3X