dec 2009 qs3 transfer pricing

In this question they are not really calculating a transfer price, but they are examining the consequences of buying from within the group or an outside supplier. Division A is not a problem, but the tax in Division B is confusing because you don't know the revenue figure there. What they are doing is saying that if Division B has a cost of 162,000, then this is effectively lowered because it will receive tax relief at 20% on this espense.