Required; Answer all the Questions asked please

price controversy! You DELS Question 1C-ES05 Within Sparta Enterprises, the extraction division transfers 100% of its totale put of 500,000 units of a particular type of clay to the pet products division, which treats the day and sells it as cat litter for $42 a unit. The pet products division cur rently pays a transfer price for the clay of cost plus SI, or $22 a unit. The clay has many other uses and could be sold in the marketplace for $26 in virtually unlim ited quantities. If the extraction division did sell the day into the wider market, a would incur a variable selling cost of $1.50 per unit The extraction division recently hired a new manager, Keith Richardson, who immediately complained to top management about the disparity between the trans fer price and the market price. For the most recent year, the pet products divisions contribution margin on the sale of 500,000 units of cat litter was $5,775,000. The extraction unit's contribution margin on the transfer of an equal number of units of clay to the pet products division was $1,625,000 Refer to the Unit Cost Structure chart for more information. Unit Cost Structure Extraction Division Pet Products Division $22.00 2.00 Transfer price for clay Material cost Labor cost Overhead Total cost per unk $4.00 6.00 4.00 11.00 521.00 7.00 535.00 "Overhead in the extraction division is 25% fard and 75 variable Overhead in the pet products division is 65% ford and variable Questions A. Why don't cost-based transfer prices provide an appropriate measure of divi- sional performance? B. Using the market price for the clay, what is the contribution margin for the two divisions for the most recent year? C. What price range for the day would be acceptable to both divisions if Sparta instituted negotiated transfer pricing and allowed the divisions to buy and sell day on the open market? Explain your answer. D. Why should a negotiated transfer price result in desirable behavior from the management of the two divisions