Tipton Onestop Desorating sells paint and paint supplies, carpet, and wallpoper at a single store location in suburban Des Moines. Although the company has been very profitable over the years, management has seen a significant deoline in wallpaper sales and earnings. Much of this decline is artributable to the Internet and to companies that advertise deeply discounted prices in magazines and offer customers free shippiog and toll-free telephone numbers, Recent figures follow. Tipton is studying whether to drop wallpsper because of the changing market and aceompanying loss. If the line is dropped, the following changes are expected to oocur: - The vacated space will be remodeled at a cost of $12,400 and will be devoted to an expanded line of highend carpet. Sales of carpet are expected to inerease 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 persent. 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 earpet line. Required: 1. Should Tipton close its wallpaper operation? Show computations to support your answer. 2. Assume that Tipton's wallpaper imentory at the time of the closure decision amounted to $23,700. How would jou have treated this additional information in making the decision? 3. What advantages might Internet-and magazinebased firms have over Tipton that would allow these organizations to offer deeply discounted prices-prices far below what Tipton can offen