Company background information Dynamadics Inc. is a large, locally owned company operating in several regions within western Canada. Each region manufactures and sells apparel and accessories for both business and casual wear. The original product lines include shoes, boots, sandals, purses, backpacks and computer bags. Some regions have received approval from company owners to introduce new product lines for potential expansion in other regions. The company has an extensive distribution channel allowing for sales throughout the world. Operational information - Part 1 The Vancouver region of Dynamadics has operations in the city of Vancouver and the city of Victoria. This region has had great success marketing and selling its products, perhaps due to its accessibility to international customers. Sales volumes and revenues have been high, however the owners are concerned with the low level of operating income in relation to these sales levels. You have been asked to conduct analysis and work with the Vancouver regional managers to identify opportunities to improve profits. You have received the following operating results for 2020. Dynamadics Inc. Vancouver Region Income Statement For the Year Ended December 31, 2020 Sales Cost of goods sold Gross Margin Selling and administrative expenses Operating income $ 1,160,000 670,000 490,000 313,000 $177,000 (note: there were no inventories at the beginning and end of the year).