Ash Ltd has two divisions, Division A and Division B$.$ Division A manufactures component Beta, of which variable cost is $18$ per unit. The annual capacity of Division A is $1,900$ units and all are transferred to division B$.$ Division B incurs extra cost of $20$ to transform component Beta into component Gama, which is sold to the external market for $66$ each.

Required:

I. If the marginal costing pricing approach is used, identify the transfer price, the profit margin of each division, and explain why the manager of division A may consider the transfer price $($based on marginal costing$)$ unfair. Suggest any amendments that may be required to make the transfer price a fair price for division A$.$

II$.$ In the case that there is an external demand for $1,000$ units of component Beta at a market price of $38,$ what price could Division A argue should be used as the transfer price and why?