After seeing these figures roamings president remarked that

Reference no: EM13589143

Roaming Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Roaming produces and sells only 6,400 bikes each year. Due to the low volume of activity, Roaming is unable to obtain the economies of scale that larger producers achieve. For example, Roaming could buy the handlebars for $32 each; they cost $35 each to make. The following is a detailed breakdown of current production costs.

Item

Unit Cost

Total

Unit-level costs

Materials

108,800

Labor

51,200

Overhead

12,800

Allocated facility-level costs

51,200

Total

224,000

After seeing these figures, Roaming's president remarked that it would be foolish for the company to continue to produce the handlebars at $35 each when it can buy them for $32 each.

Required:

a.	Calculate the total relevant cost. (Omit the "$" sign in your response.)

	Per Unit	Total
Total relevant cost	$	$

Reference no: EM13589143

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