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 just ended.
Sales_______________________________________________________________$45,000
Less: Cost of food____________________________________________________ 20,000
Gross Profit $25,000
Less: Operating expenses:
Wages of counter personnel_____________________________________$12,000
Paper products (e.g. napkins)____________________________________ 4,000
Utilities (allocated)____________________________________________ 2,900
Depreciation of counter equipment and furnishings__________________ 2,500
Depreciation of building (allocated)_______________________________ 4,000
Deli manager's salary (allocated)_________________________________ 3,000
Total 28,400
Loss on ice cream counter$(3,400)
Required: Criticize and correct the owner's analysis.