"Plz answer in Primary lvl perspective if can"

You need to be more open-minded for the methods and explore the various ideas. In other words, always try to figure out a story line for the question before attempting the question.

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Give you an idea first. What happens to their difference in money after they each spent the same amount of money?

If you have guessed it right...

...the difference in their quantities of money remains unchanged.

$1197.50 - $543.50 = $654

[You have learnt unchanged quantities at some point in P4 or P5]

But this results in May having 2.6 times as much money left as Layla. You wouldn't want to let May have "2.6" units, correct? (Because it's a decimal and not a whole number)

It's easier to let Layla have 10 units of money at first and May have 2.6 times that of Layla, or in short, 26 units.

May: 26 units
Layla: 10 units

The difference in their money, 16 units, remains unchanged at $654.

16 units --> $654

We proceed to find Layla's final sum of money (10 units).

1 unit --> $654 / 16 (I use / symbol for division)
10 units --> $654 / 16 x 10
10 units --> $408.75

So, Layla had $408.75 left.

The cost of the watch
= $543.50 - $408.75
= $134.75

It's not wise to draw model for such questions because you could have to cut the model into many many blocks.