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Flint Corporation manufactures car stereos. It is a division of Berna Motors, which manufactures vehicles. Flint sells car stereos to Berna, as well as to
Flint Corporation manufactures car stereos. It is a division of Berna Motors, which manufactures vehicles. Flint sells car stereos to Berna, as well as to other vehicle manufacturers and retail stores. The following information is available for Flint's standard unit: unit variable cost $ unit fixed cost $ and unit selling price to outside customer $ Berna currently purchases a standard unit from an outside supplier for $ Because of quality concerns and to ensure a reliable supply, the top management of Berna has ordered Flint to provide units per year at a transfer price of $ per unit. Flint is already operating at full capacity. Flint can avoid $ per unit of variable selling costs by selling the unit internally.
Answer each of the following questions.
What is the potential loss to the corporation as a whole resulting from this forced transfer?
Potential loss
$
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