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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

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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 other vehicle manufacturers and retail stores. The following information is available for Flint's standard unit: unit variable cost $39, unit fixed cost $22, and unit selling price to outside customer $88. Berna currently purchases a standard unit from an outside supplier for $83. Because of quality concerns and to ensure a reliable supply, the top management of Berna has ordered Flint to provide 236,000 units per year at a transfer price of $33 per unit. Flint is already operating at full capacity. Flint can avoid $3 per unit of variable selling costs by selling the unit internally.
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