See attachment. Please show all work so that I can try and get an understanding as to how to figure the problem out on my own Thanks
Please show all work so that I can try and get an understanding as to how to figure the problem out on my own
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.
Cost of sales
What is the profitability of Unfocused Books’ three departments and what
recommendations would you make to the owners?
NOTES FROM THE PROFESSOR ON HOW TO ANSWER QUESTION.
This is a relatively simple problem where you will need to add a total column to the table
and do the math for extensions. All this problem asks is to calculate the profitability of
the three departments. You are given the revenue totals and you are given cost of sales
%. Now, what does that mean? It means you need to calculate the dollar value of cost
of sales and after than, when you have sales and then cost of sales, what can you or do
you need to calculate for all departments (thinking of profitability). Next, do you have all
the costs included? you are given departmental costs and shared fixed costs. In reading
the chapter, what do you think about when you see “shared” costs? On page 186 pay
attention to “contribution per unit”. NOTE (HINT) In determining the contribution number,
note: the cost of sales excludes overheads and has a higher proportion of variable costs
than operating costs. In most cases the “Cost of goods sold/cost of sales” does consist
almost entirely of variable costs. THEREFORE, the term CONTRIBUTION describes the
difference between sales and variable costs. NOTE: Don’t forget the ‘recommendations’
you need to make based on the profitability results.