Test Company produces a component part included in its final product. A supplier has contacted the company with an offer to provide the component part for $60 per unit. In evaluating the offer, Test Company identified the following costs to produce the component.

Test Company projected the following unit sales for the next five quarters.

	Unit sales
Year 1, Quarter 1	1,000
Year 1, Quarter 2	1,200
Year 1, Quarter 3	1,500
Year 1, Quarter 4	2,000
Year 2, Quarter 1	1,000

The companys policy is to have 25% of the following quarters projected sales in ending finished goods inventory. The beginning inventory in Year 1 is expected to satisfy the inventory policy.

Each unit required 2 lbs. of direct materials. Projected direct materials cost is $5.00 per lb. The companys policy is to have 20% of the following quarters production needs in ending raw materials inventory. The beginning inventory in Year 1 is expected to satisfy the inventory policy.

Determine the budgeted cost of direct materials purchases for Year 1, Quarter 1.

Note: Give your answer using dollar signs and commas but not decimal points (cents).

Example: $12,345

Test Companys average monthly demand is 4,000 components per month.

Assume that 20% of the fixed overhead can be avoided if Test Company discontinues production of the component.

Determine the total relevant cost of producing the component.

Note: Give your answer using dollar signs and commas but not decimal points (cents).

Example: $12,345