=+19-22 KK Transfer pricing, general guideline, goal congruence (CMA, adapted) OBJECTIVES 3, 7, 8 Alfriston Motors Ltd

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=+19-22 KK Transfer pricing, general guideline, goal congruence (CMA, adapted) OBJECTIVES 3, 7, 8 Alfriston Motors Ltd operates as a decentralised multidivision company. The Opal Division of Alfriston Motors purchases most of its airbags from the Airbag Division. The Airbag Division’s incremental cost for manufacturing the airbags is $90 per unit. The Airbag Division is currently working at 80% of capacity. The current market price of the airbags is $125 per unit.

Required 1 Using the general guideline presented in the chapter, what is the minimum price at which the Airbag Division would sell airbags to the Opal Division?

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