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10.1

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?

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