Thanks everybody for your input. I found that Volvo supplies a bolt on back-up flange replacement $29 Canadian. Useful information for everyone!

If you want to do it yourself, you can cut off the old spin flange with a grinder, and replace it with a bolt-on flange (~$20). That worked well for me. The header pipe needed to be replaced a year or two later, but the bolt-on flange worked fine for that time, and it is still in good shape.

Possibly your (original?) header pipe will need to be replaced in a couple of years anyway, and that's why the garage is suggesting you replace it? The header pipe would cost you somewhere between $85 - $130 plus shipping if you order it from FCP, -- so assuming the worst case scenario, you could do it yourself on a weekend for $150. Thinking of it that way, the $300 quote from the garage doesn't sound unreasonable.

Sadly, auto shops are not in the business of saving you money, quite the opposite. Also they have to cover themselves from liabilty by making sure repairs stay repaired. If they fix this problem with a minimum of parts and labor, how do they know you won't come back complaining if the header pipe rusts through in a few months time?

--
'92 245 5-speed, '92 944 GL auto

Baker is right about DIY
But you should bail out from further business with that muffler shop.
Ask around garages and see who welds, get a price for welding up a new flange etc. It's not a big deal.

Bill

You can weld it.
Cut a new front flange or have a machine shop do it using the old one as a template.
Bolt it to the cat flange and weld it to the downpipe, if the pipe is rusted out just cut it back and get a slip adapter, connect it to the downpipe with clamps , bolt the 2 flanges together and weld the fwd flange to the connector pipe. Don't forget the donut seal.
Arc welders are cheap and not too difficult to learn.
Check craigslist for $75 used welders.

Muffler places aren't interested in come backs so they don't get into repairs.