Franklin Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Franklin produces and sells only 7,700 bikes each year. Due to the low volume of activity, Franklin is unable to obtain the economies of scale that larger producers achieve. For example, Franklin could buy the handlebars for $33 each; they cost $36 each to make. The following is a detailed breakdown of current production costs.

Item	Unit Cost	Total
Unit-level costs
Materials	$ 16	$ 123,200
Labor	10	77,000
Overhead	3	23,100
Allocated facility-level costs	7	53,900
Total	$ 36	$ 277,200

After seeing these figures, Franklins president remarked that it would be foolish for the company to continue to produce the handlebars at $36 each when it can buy them for $33 each.

Required

Calculate the total relevant cost. Do you agree with the presidents conclusion?

Franklin Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are highquality racing bikes with limited sales. Franklin produces and sells only 7,700 bikes each year. Due to the low volume of activity, Franklin is unable to obtain the economies of scale that larger producers achieve. For example, Franklin could buy the handlebars for $33 each; they cost $36 each to make. The following is a detailed breakdown of current production costs. After seeing these figures, Franklin's president remarked that it would be foolish for the company to continue to produce the handlebars at $36 each when it can buy them for $33 each. Required Calculate the total relevant cost. Do you agree with the president's conclusion