Exercise 6-10A (Algo) Outsourcing decision LO 6-3 Gibson Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high- quality racing bikes with limited sales. Gibson produces and sells only 7,800 bikes each year. Due to the low volume of activity, Gibson is unable to obtain the economies of scale that larger producers achieve. For example, Gibson could buy the handlebars for $31 each, they cost $34 each to make. The following is a detailed breakdown of current production costs. Unit Cost Total Item Unit-level costs Materials $17 $132,600 78,000 15,600 Labor 10 Overhead 2 Allocated facility-level 39,000 costs $34 $265,200 Total After seeing these figures, Gibson's president remarked that it would be foolish for the company to continue to produce the handlebars at $34 each when it can buy them for $31 each. Required Calculate the total relevant cost. Do you agree with the president's conclusion? Per Unit Total Total relevant cast Do you agree with the president's conclusion