What is the minimum transfer price that Whispering Winds should accept?

Minimum transfer price

$

$($b$)$

Your answer is incorrect.

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

Potential loss $

Whispering Winds Corporation manufactures car stereos. It is a division of Berna Motors, which manufactures vehicles. Whispering Winds sells car stereos to Berna, as well as to other vehicle manufacturers and retail stores. The following information is available for Whispering Winds's standard unit: unit variable cost $$36,$ unit fixed cost $$22,$ and unit selling price to outside customer $$85.$ Berna currently purchases a standard unit from an outside supplier for $$80.$ Because of quality concerns and to ensure a reliable supply, the top management of Berna has ordered Whispering Winds to provide $224,000$ units per year at a transfer price of $$34$ per unit. Whispering Winds is already operating at full capacity. Whispering Winds can avoid $$3$ per unit of variable selling costs by selling the unit internally.

Answer each of the following questions.

$($a$)$

Your Answer

Correct Answer $($Used$)$

What is the minimum transfer price that Whispering Winds should accept?

Minimum transfer price

$($B$)$ what is the potential loss to the corporation as a whole as a whole resulting from this forced transfer?

$