Lake McDonald Gift Shop has decided to price the National Parks Memory Card Game that it sells at cost plus 65%. The National Parks Memory Card Game costs $20 each, and another one, the Guess This Animal Track Game, costs $40 each.

Required:

1. What price will Lake McDonald Gift Shop charge for each National Parks Memory Card Game?

2. What price will Lake McDonald Gift Shop charge for each Guess This Animal Track Game?

3. Briefly explain two specific challenges that the financial manager of Lake McDonald Gift Shop might encounter in employing this cost-plus pricing approach.