location in het top Decorating (Green) sells paint and paint supplies, carpet and wallpaper at a single-store 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: Selling Price Paint & Supplies Carpeting Wallpaper Sales $380,000 $460,000 $140,000 Variable Costs (5228,000) ($322,000) ($112.000) Fixed Costs ($56,000) ($75,000) ($46,000) Operating Income $96,000 $63,000 ($18,000) Green is considering dropping 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 ration will rise by 5 percentage points Green can cut wallpaper's fixed costs by 40%. Remaining fixed costs will continue to be incurred The firm will increase advertising expenditures by $25,000 to promote the expanded carpet line Required a) (6 marks) Should Green close its wallpaper operation? Show computations to support your answers