Hill Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Hill produces and sells only 6,000 bikes each year. Due to the low volume of activity, Hill is unable to obtain the economies of scale that larger producers achieve. For example, Hill could buy the handlebars for $28 each; they cost $32 each to make. The following is a detailed breakdown of current production costs.

After seeing these figures, Hill's president remarked that it would be foolish for the company to continue to produce the handlebars at $32 each when it can buy them for $28 each.
Required
Do you agree with the president's conclusion? Support your answer with appropriatecomputations.

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Item Unit Cost Total Unit-level costs Materials Labor Overhead S 84,000 60,000 18,000 30,000 S192,000 S14 10 Allocated facility-level costs5 $32 Total