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    This posting addresses profit analysis of Day Street Deli.

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    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

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    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.