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 7,300 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 $34 each; they cost $37 each to make. The following is a detailed breakdown of current production costs:

Item Unit Cost Total

Unit-level costs

Materials $ 14 $ 102,200

Labor 10 73,000

Overhead 2 14,600

Allocated facility-level costs 11 80,300

Total $ 37 $ 270,100

After seeing these figures, Gibsons president remarked that it would be foolish for the company to continue to produce the handlebars at $37 each when it can buy them for $34 each.

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