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.

George Street Deli's owner is disturbed by the poor profit performance of his gelato bar. He has prepared the following profit analysis: Sales $135 000 Less Cost of food 60 000 Gross margin $ 75 000 Less Operating expenses: Wages of counter staff $36 000 Paper products (e.g. serviettes) 12 000 Utilities (allocated) 8 700 Depreciation of counter equipment and furnishings 7 500 Depreciation of building (allocated) 12 000 Deli manager's salary (allocated) 9 000 Total expenses 85 200 Loss on gelato bar $(10 200)