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 Carpeting Wallpaper Sales $380.000 $460.000 $140.000 Variable costs $228,000 $322,000 $112.000 Fixed costs 56,000 75.000 45.000 Total costs $284.000 $397.000 $157.000 Operating income (loss) $ 96,000 $ 63.000 $ (17,000)