Department A is required to transfer 50% of its output to Department B at cost. Department B adds value to the product and then sells to outside customers. Manager A complains that the performance of Department B is overstated while that of Department A is understated. Manager B says that if a higher transfer price is charged, Department B will reject the output of Department A and seek an external supplier. As an independent expert, you have been asked to recommend a solution to the dispute. Write a short essay (250 words) recommending, with reasons, a fair system of transfer pricing.