ACC650_T8.docx Problem 14 - 47 Closing an Unprofitable Department Grand Canyon Univers

ACC650_T8.docx    Problem 14 - 47 Closing an Unprofitable Department  Grand Canyon University: ACC650  Exercise 14 – 47  1.According to the calculations provided below Tipton should not close the wallpaper operations.   As seen from the calculations above if Tipton closes its wallpaper operations then the company would be worse off because it would cost the company a loss of $12,800 if it discontinued the wallpaper operations. With the loss of $12,800 Tipton would decrease from an operating income of $142,000 down to $129,200 as shown in the calculations below.  2.Tiptons wallpaper inventory would be considered a sunk cost. A sunk cost is money that has already been spent and cannot be recovered, and the cost remain the same regardless of the outcome of a decision (Tuovila, 2020). Thus, the wallpaper inventory which amounted to $23,700 would have been ignored and not considered in the decision because the cost of the inventory can not be recovered since Tipton has already spent the money and if they were to close the wallpaper operation the inventory would remain untouched.   3.There are many advantages that an Internet and/or magazine-based firm would have over Tipton that would allow these organizations to offer discounted prices below what Tipton can offer. According to Ajeet Khurana author of Advantages of E-Commerce Over Traditional Retail these advantages include:   a.With the ability to gain new customers with the help of search engines Internet and/or magazine-based firms are able