Innerspace, Inc. produces drones. The market research department at Innerspace, Inc., gets an idea to market the drone technology, which is a small computer, to the auto industry for use in self-driving cars. Because of the riskiness of the venture, Innerspace, Inc., requires an operating margin 40 percent (operating margin equals revenues minus manufacturing costs). The competitors of Innerspace, Inc., market a similar small computer for a price of $490. The manufacturing department at Innerspace, Inc., estimates for following manufacturing costs for the small computer to be installed in self-driving cars. Direct materials Direct labor Manufacturing overhead Total $232 120 104 $456 Required: a. Suppose Innerspace uses cost-plus pricing, setting the price to manufacturing costs plus 40 percent of manufacturing costs. What price should it charge for the computer? b. Suppose Innerspace uses target costing. What is the highest acceptable manufacturing cost for which Innerspace would be willing produce to the small computer?