Ms. Kane, the china and glass buyer of Crystal Clear, Inc., was asked to present a yearly profit and loss statement in skeletal form to the divisional merchandise man ager. In addition, she wanted to prepare a summary of comments that included a comparison of her performance this year with that of her major competitor, China Seas, Ltd. Ms. Kane obtained the following information from Crystal Clear's statisti- cal department Gross sales Alteration and workroom costs Opening inventory at cost Closing inventory at cost New purchases at cost Inward freight Cash discounts General overhead Advertising Salaries Rent Customer returns and allowances $135,000 $1,000 $49,500 $61,000 $77,500 $1,500 4% $11,000 $9,000 $20,000 $8,600 $15,000 Ms. Kane obtained, from outside research, profit and loss data on her competitor, China Seas, which had the following results for the same year: Profit 6% or $7,350 Operating expenses 40% Ms. Kane then prepared a skeletal profit and loss statement for her department and for that of her competitor, China Seas. On completion of this task, she compared the two statements. Based on this study, where and how did Ms. Kane determine that she could take action that would give immediate results and have an impact on the department's profitability? Support the suggested action mathematically