Question 6+ Fittipaldi plc produces merchandise for racing enthusiasts. It is currently considering its marketing and pricing strategy for a new replica t-shirt for one of the major racing manufacturers. Fittipaldi plc is trying to decide whether to set the price for the t-shirt at $25, $32 or $38. It has forecast global sales volumes of the t-shirt at those different pricing levels as follows: Sales price of $25 Sales price of $32 Sales price of $38 per t-shirt per t-shirt- per t-shirte Market Demande Forecast sales Forecast sales Forecast sales volume (000) volume (000) volume (000) Poor 25- 152 10- Normale 35- 302 28- Good 50- 42- 352 Each t-shirt produced requires raw material (cotton) of $3.50. The direct labour involved in the production of each t-shirt has been estimated at $2.00. Other variable overhead costs are estimated at $7.50 per t-shirt.- Fixed production costs are estimated to be $100,000. The level of marketing costs, however, will depend upon the sales price. If the sales price is $25 per t-shirt, the marketing costs will be $18,000. If the sales price of $32 per t-shirt is chosen, the marketing costs will be $38,000. If a selling price of $38 per t-shirt is chosen, the marketing costs will be $55,000.- As a junior accountant in the company, the Chief Financial Officer (CFO) is seeking your advice in deciding which selling price per t-shirt should be charged. Required: a) Prepare a table showing the profit for each outcome (10 marks) b) Explain the decision criteria given below and advise the marketing manager which sales price should be chosen if the company applies + i. The maximin decision criterion- ii. The maximax decision criterion- iii. The minimax regret decision criterion (10 marks) Total 20 marks END OF QUESTION PAPER