Benson Corporation manufactures car stereos. It is a division of Berna Motors, which manufactures vehicles. Benson sells car stereos to Berna, as well as to other vehicle manufacturers and retail stores. The following information is available for Benson's standard unit: variable cost per unit $31, fixed cost per unit $25, and selling price to outside customer $95. Berna currently purchases a standard unit from an outside supplier for $89. Because of quality concerns and to ensure a reliable supply, the top management of Berna has ordered Benson to provide202,000units per year at a transfer price of $29per unit. Benson is already operating at full capacity. Benson can avoid $3per unit of variable selling costs by selling the unit internally.

Answer each of the following questions.

(a)

What is the minimum transfer price that Benson should accept?

Minimum transfer price?

What is the potential loss to the corporation as a whole resulting from this forced transfer?