Picture your ideal retirement and describe.

Lots of money

Explanation:

I would want to save up in order to play sports and video games all day.  I would also like to travel a lot

The gross profit is $ 6,240,000.00  

The gross profit under the second  pricing arrangement is $ 3,744,000.00  

The correct answer to the last is A,$3.50 transfer price set for all transfers.

The reason is that $3.50 is the highest suggested transfer price capable of reducing the profit of Peanut Butter division to the lowest ebb.

Explanation:

This question is better answered using spreadsheet approach in order that all the number can be spread out and the calculations can be followed through.

In the first computation I considered that all the output should be sold at $3.50 while the second involves selling 2,400,000 pounds at $3.50 per pound while the reserved quantity  of 1,600,000 was sold internally at $1.94 as suggested by the manager.