Drop down options for question 2:

1) Increased gain by $23,700

2) Reduced gain by $23,700

3) Ignored cost as is a sunk cost

4)Ignored cost for other reason

Required : all answers with workings.

Tipton One-Stop Decorating sells paint and paint supplies, carpet, and wallpaper at a single-store location in suburban Blacktown. 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 & supplies Carpetin Wallpaper Sales Variable costs Fixed costs Total costs S380,000 228,000 56,000 284,000 $96,000 $460,000 322,000 75,000 397,000 $63,000 $140,000 112,000 45,000 157,000 $17,000 perating income (loss)