Auto-Lite Manufacturing, Inc., has a division in the United States that produces a variety of headlamps and interior light packages for automobiles. One type of headlamp for compact cars is transferred to a Manufacturing Division in Italy. The headlamps can be (and are) sold externally in the United States for $25 each. Shipping costs $0.75 per headlamp and import duties are $2.00 per headlamp. When the headlamps are sold externally, Auto-Lite Manufacturing spends $2.50 per headlamp for commissions and an average of $0.30 per headlamp for advertising.

Required:
1. Which Section 482 method should be used to calculate the allowable transfer price?
2. Using the appropriate Section 482 method, calculate the transfer price.