Assume that SOSY resolved to acquire AMC and subsequently establishes two divisions managed by two independent management teams:(i) Determine the budgeted minimum transfer price per litre at which the selling division will be willing to transfer the required 50 000 litres of Merc for the 2021 financial year.

4.3. Possible acquisition of Ama-Ventilator Chemicals (PTY) Ltd (AMC) Following the COVID-19 outbreak, SOSY's executive management decided it was an opportune time to assess the possible acquisition of AMC, a company that specialises in the manufacturing of chemical Venus which is used by the ventilators to fight against COVID-19. As part of the due diligence, Dr Masheleng (SOSY's Chief Financial Officer) gathered the following information: 4.3.1. SOSY will need to establish a new separate Division which will be solely responsible for the manufacturing and the subsequent selling of chemical Venus. 4.3.2. The manufacturing of chemical Venus requires Merc as the main ingredient. SOSY has a capacity to manufacture 100 000 litres of Merc and the related external demand will remain at 80 000 litres. 4.3.3. In order to fully meet the demand of chemical Venus, 50 000 litres of Merc will be transferred to the newly established division. 4.3.4. Merc that will be transferred internally will not require packaging labour costs. 4.3.5. The other variable manufacturing overheads to manufacture 100 000 litres of Merc will be R60 000. 4.3.6. The variable distribution costs (refer to 2.1 above) are only incurred on external sales. 4.3.7. Unless otherwise stated, all the other applicable information will remain the same as 2020 financial year budget information. CONFIDENTIAL [TURN OVER]