QUESTION 3 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 Less: Cost of food Gross profit Less: Operating expenses: $45,000 20,000 $25,000 Wages of counter personnel $12,000 Paper products (e.g., napkins) 4,000 Utilities (allocated) 2,900 Depreciation of counter equipment and 2,500 furnishings Depreciation of building (allocated) 4,000 Deli manager's salary (allocated) 3,000 28,400 $(3,400) Total Loss on ice-cream counter Required: Criticize and correct the owner's analysis. QUESTION 4 Duo Company manufactures two products, Uno and Dos, Contribution margin data follow. Unit sales Less: variable cost Uno Dos $13.00 $31.00 Direct material Direct labor Variable overhead $7.00 $5.00 1.00 6.00 Variable selling and administration cost Total variable cost Unit contribution margin 1.25 7.50 .75 .50 $10.00 $19.00 $3.00 $12.00 Duo company's production process uses highly skilled labor, which is in short supply. The same employees work on both products and earn the same wage rate. Required: Which of Duo Company's products is more profitable? Explain.