Dole Industries produces chemical compounds. Division A mixes the compounds which are then transferred to Division B for refinement for 125% of full manufacturing costs. Current output by Division A is 50,000 compounds. Division B is then able to sell the final product to pharmaceutical companies for $150 per compound. Division B can purchase compounds in the market for a price of $75 a compound. Divisional costs per compound are: Division A o Direct Materials - $10 o Direct Manufacturing labor - $10 Manufacturing overhead cost-$25 (40% of costs are variable) Division B o Direct Materials - $3 o Direct Manufacturing labor costs - $12 o Manufacturing overhead cost - $20 (35% of costs are variable) Required a. Calculate the operating income for each division under the following transfer-pricing methods: Market price and 125% of full manufacturing cost. b. If manager of each division receives a bonus of 1% based on the divisional operating income, report what bonus each manager would receive under each transfer price method. Which transfer price would each manager prefer?