Answer of the question

Blue Ocean Company sells high-quality T-shirts. The business's profit calculation for last year is shown here: Blue Ocean has decided to increase the price of its product to $20 per t-shirt. The business believes that if /t increases its fixed advertising cost by $4,500, sales volume will be 2300t shirts next year. The variable cost per t-shirt will be unchanged. Required: a. Using the above income statement format, show the calculation of expected profit for Blue Ocean's operation next year. (20 marks) b. How many t-shirts would Blue Ocean have to sell to earn as much profit next year as it did last year? (10 marks) c. Do you agree with Blue Ocean's decision? Explain why or why not. (10 marks)