George Street Deli's owner is disturbed by the poor profit performance of his gelato bar. He has prepared the following profit analysis:

Required:
1. Evaluate the above analysis that has been prepared by the manager.
2. Provide a correct analysis and assess whether or not the gelato bar should be continued.

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$67 500 Sales 30 000 Less Cost of food $37 500 Gross margin Less Operating expenses: $18 000 Wages of counter staff 6 000 Paper products (e.g. serviettes) 4 350 Utilities (allocated) 3 750 Depreciation of counter equipment and furnishings 6 000 Depreciation of building (allocated) 4 500 Deli manager's salary (allocated) 42 600 Total expenses $(5 100) Loss on gelato bar