Actually Alan most likely has no idea at all what it costs 797 to build a mic. He knows what 797 is willing to sell the mic to him for, but that says NOTHING about what it cost 797 to make. Also cost accounting is a very funny thing. You have the marginal cost, which is the cost to make one more at your current economies of scale, and then you have the fully burdened cost, which includes production ramp-up, facilities, overhead, regulatory costs and on and on. Nobody would sell for just their marginal cost of producing the unit.
It really is something of a moot point. What it all boils down to is whether the mic is a good value.
And as to the original question as to whether it was a good business to get into...do you think you can be a better value? How?