How much will operating income be

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Problem 1: A company such as Starbucks is considered a price-setter. Which of the following approaches would Starbucks employ to pricing products?

Option 1: percentage pricing

Option 2: cost-plus pricing

Option 3: target costing

Option 4: cost plus one

Problem 2: Ancinas Company produces printers and uses a standard part in the manufacture of several of its printers. The cost of producing 43,000 parts is $280,000, which includes fixed costs of $136,000 and variable costs of $144,000. The company can buy the part from an outside supplier for $5.00 per unit, and avoid 30% of the fixed costs. If Ancinas Company makes the part, how much will its operating income be?

Option 1: $30,200 less than if the company bought the part.

Option 2: $65,000 greater than if the company bought the part.

Option 3: $65,000 less than if the company bought the part.

Option 4: $30,200 greater than if the company bought the part.

Reference no: EM132841019

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