John wenman, merchandising manager at goodmark’s stationery store, is setting the price for craft fountainpens. the pens cost him $5 each. the store’s usual markup is 50 percent over cost that suggests that johnshould set the price at $7.50. however, to make this price seem like an unusually good bargain, john begins byoffering the pen at $10. he realizes that he won’t be able to sell many pens at this inflated price, but he doesn'tcare. john holds the price at $10 for only a few days, and then cuts it to the usual level—$7.50—and advertises: "terrific bargain on craft pens. were $10, now only $7.50! "note: the test the ftc sets up for "former" price comparisons is, "if the former price is the actual, bona fide priceat which the article was offered to the public on a regular basis for a reasonably substantial period of time, it provides a legitimate basis for the advertising of a price comparison."

1. if consumers perceive craft pens to be a good value at $10, is it fair for goodmark’s to sell the pen at thatprice?
2. is john’s price setting approach ethical? is it legal? explain.
3. how would you have set and advertised the craft pen’s price? would you have used a cost-plus approach orsome other method? explain.

Flounder supply company, a newly formed corporation, incurred the following expenditures related to land, to buildings, and to machinery and equipment. abstract company’s fee for title search $1,066 architect’s fees 6,499 cash paid for land and dilapidated building thereon 178,350 removal of old building $41,000 less: salvage 11,275 29,725 interest on short-term loans during construction 15,170 excavation before construction for basement 38,950 machinery purchased (subject to 2% cash discount, which was not taken) 112,750 freight on machinery purchased 2,747 storage charges on machinery, necessitated by noncompletion of building when machinery was delivered 4,469 new building constructed (building construction took 6 months from date of purchase of land and old building) 994,250 assessment by city for drainage project 3,280 hauling charges for delivery of machinery from storage to new building 1,271 installation of machinery 4,100 trees, shrubs, and other landscaping after completion of building (permanent in nature) 11,070 instructions determine the amounts that should be debited to land, to buildings,and to machinery and equipment. assume the benefits of capitalizing interest during constructionexceed the cost of implementation. indicate how any costs notdebited to these accounts should be recorded.