TechOne is a start-up biotechnology firm specializing in non-toxic fertilizer for organic farming. Scientists at one of TechOne's subsidiaries, GrowMore recently developed a new fertilizer, 244 to Increase the growth rate of crops. In addition to producing this new fertilizer, GrowMore produces another fertilizer, 377, for external sale.

Per kilogram (kg) data on the selling price, variable costs, machine hours necessary for production are given below. Note that there are no fixed manufacturing or selling costs.

	244	377
Selling price	30.00	14.00
Variable Manufacturing Cost	6.00	5.00
Variable Selling Cost	3.50	2.00
Machine Hours	2.0	0.5
External Monthly Market Demand (in kgs)	5,000	10,000

Interpret the data on External Monthly Market Demand as follows: GrowMore can sell up to 5,000 kgs of 244 and 10,000 kgs of 377 at their respective market prices but cannot sell even one kilogram over these amounts, even at a lower price. If GrowMore chooses to sell fewer kilograms (of either product), it cannot charge a higher price.

GrowMore has 16,500 machine hours of capacity available every month.

Another division of TechOne, Florish has an opportunity to process 244 further into a consumer product that would enhance growth even more. Florish would incur additional variable manufacturing costs of 7 per kilogram in reducing the potency of the fertilizer and packaging it for home use. An outside distributor has offered Florish 30/kg for up to 7,000 kgs of the modified 244 per month as long as it provided in 1,000 kg increments.

GrowMore does not incur any variable selling costs for internal transfers.

All divisions are only evaluated as profit centers.

Question 1

5 pts

Under the status quo (i.e., without any modified 244 production/sales), how many kilograms of 244 will GrowMore choose to make and sell each month in order to maximize its divisional profits? Enter your answer as just a number with no currency symbols or per kg notation.

Question 2

5 pts

Under the staus quo (i.e., without any modified 244 production/sales), how many kilograms of 377 will GrowMore make and sell each month in order to maximize its divisional profits? Enter your answer as just a number with no currency symbols or per kg notation.

Question 3

5 pts

At the status quo level of monthly production and sales for 244 and 377 you calculated above, what are total firm-wide profits each month.

Question 4

10 pts

What is the optimal transfer price per kg for GrowMore to charge Florish for the new fertilizer, 244, for any quantity between 0 to 750 kgs? That is, figure out the optimal TP per kg for any quantity of internal transfers of 244 between 0 and 750 kgs. Enter your answer as just a number with no currency symbols or per kg notation.

Question 5

20 pts

What is the optimal transfer price per kg for GrowMore to charge Florish for the new fertilizer, 244, for any quantity between 751 to 5,750 kgs? That is, figure out the optimal TP per kg for any quantity of internal transfers between 751 and 5,750 kgs. Enter your answer as just a number with no currency symbols or per kg notation.

Question 6

20 pts

What is the optimal transfer price per kg for GrowMore to charge Florish for the new fertilizer, 244, for any quantity between 5,751 to 8,250 kgs? That is, figure out the optimal TP per kg for any quantity of internal transfers between 5,751 and 8,250 kgs. Enter your answer as just a number with no currency symbols or per kg notation.

Question 7

20 pts

Given the optimal transfer pricing schedule you calculated in Q4 - Q6 above, how many kilograms of 244 will the Florist Division want transferred from the GrowMore Division each month in order to maximize the Florish Division's profits? Enter your answer as just a number with no kgs notation.

Question 8

20 pts

By how much will total monthly profits at TechOne increase or decrease at the level transfers you determined in Q7 compared to the status quo (i.e., with no modified 244) amount that you calculated above for Q3? Enter an increase as a positive number and a decrease as a negative number. Enter your answer as just a number with no currency notation.

Question 9

20 pts

For Q9 and Q10, assume that TechOne has chosen to set the transfer price for 244 to 22/kg instead of the optimal transfer pricing schedule you calculated above. That is, the Florish division will be charged 22 per kilogram for each kilogram of 244 that it wants transferred, regardless of how many kilograms it wants. Under this transfer pricing policy, how many kilograms of 244 will Florish want transferred from the GrowMore division each month? Enter your answer as just a number with no kgs notation.

Question 10

20 pts

By how much will total monthly profits at TechOne change at the level of transfers you determined in Q9 compared to the status quo (i.e., with no modified N44) amount you calculated above in Q3? Enter an increase as a positive number and a decrease as a negative number. Enter your answer as just a number with no currency notation. Note, do NOT compare the profits to the amount you determined in Q8 above.