The correct answer is A. $9,650.
The relevant incremental cost is the difference between the costs of two alternatives. In this case, the two alternatives are to produce the product in-house or to outsource it. The relevant costs are the opportunity cost of capital and the carrying cost of inventory. The opportunity cost of capital is the cost of using the company’s own money to finance the project. The carrying cost of inventory is the cost of storing the product.
The opportunity cost of capital is $2950 and the carrying cost of inventory is $6700. Therefore, the relevant incremental cost is $2950 + $6700 = $9650.
Option B is incorrect because it is the sum of the opportunity cost of capital and the carrying cost of inventory. Option C is incorrect because it is the carrying cost of inventory. Option D is incorrect because it is the difference between the opportunity cost of capital and the carrying cost of inventory.