Problem - Unfocused Books is a discount retail bookshop that has three departments: fiction, non-fiction and children's books. Sales and cost of sales for each department are shown below. In addition, each department has its own fixed costs for staffing and takes a one-third share of rental and management costs for the Bookshop as a whole.
| |
Fiction
|
Non-Fiction
|
Children's
|
|
Sales
|
250,000
|
100,000
|
75,000
|
|
Cost of sales
|
45%
|
50%
|
55%
|
|
Departmental costs
|
50,000
|
35,000
|
35,000
|
|
Shared fixed costs
|
30,000
|
30,000
|
30,000
|
What is the profitability of Unfocused Books' three departments and what recommendations would you make to the owners?