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This posting addresses profit analysis of Day Street Deli.

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.

Sales $45,000
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
Total 28,400
Loss on ice cream counter $(3,400)

Criticize and correct the owner's analysis

Solution Preview

Correct analysis:

Gross profit $25000
Wages $12000
Paper $4000

Profit ...

Solution Summary

The solution shows how to correct the profit analysis of the Day Street Deli.