Rooney Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Rooney produces and sells only 7,600 bikes each year. Due to the low volume of activity, Rooney is unable to obtain the economies of scale that larger producers achieve. For example, Rooney could buy the handlebars for $35 each; they cost $38 each to make. The following is a detailed breakdown of current production costs:

Item	Unit Cost					Total
Unit-level costs
Materials		$	17			$	129,200
Labor			11				83,600
Overhead			2				15,200
Allocated facility-level costs			8				60,800
Total		$	38			$	288,800

After seeing these figures, Rooneys president remarked that it would be foolish for the company to continue to produce the handlebars at $38 each when it can buy them for $35 each.

Required

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

Per Unit Total Total relevant cost Do you agree with the president's conclusion