Day Street Deli's owner is disturbed by the poor profit performance of his ice cream counter. He has prepared the following profit analysis for the year that just ended.
Less: Cost of food 20,000
Gross profit 25,000
Less: Operating expenses
Wages of counter personnel 12,000
Paper products 4,000
Utilities (allocated) 2,900
Depr. of counter equip. 2,500
Depr. of bldg. (allocated) 4,000
Deli manager's salary 3,000
Loss on ice cream counter $(3,400)
Criticize and correct the owner's analysis
Gross profit $25000
The solution shows how to correct the profit analysis of the Day Street Deli.