Tipton One-Stop Decorating sells paint and paint supplies, carpet, and wallpaper at a single-store loca tion in suburban Des Moines. Although the company has been very profitable over the years, manage ment 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 custom- ers free shipping and toll-free telephone numbers. Recent figures follow. Problem 14-47 Closing an Unprofitable Department (LO 144, 14-5) income foss om die 2.800 Sises Variable costs Feed costs Total costs Operating income fosse Pale and Supplies $380,000 $228,000 55.000 $284,000 $96.000 Carpeting $460,000 $322.000 75,000 $297.000 $ 63.000 Wallpaper $140.000 $112.000 15.000 $157.000 $(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 S120.000, and the line's overall con tribution margin ratio will rise hy five percentage point Tipton can cut wallpapers 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 fill by 20 percent The firm will increase advertising expenditures by $25,000 to promote the expanded carpet line Required: 1. Should Tipton close its wallpaper operation Show computations to support your