Your husband should have busted out laughing about the "low cost factor" of quilting. That is hilarious. My mom comments about the fact that I cut perfectly good yardage into pieces and sew it back together. (But she says it jokingly).
Will your MIL love the quilt? Will she love it BECAUSE it came from you and was made with love? If those questions can be answered with a resounding YES, then don't worry about what your SIL thinks or says. She is clueless and sounds like she will not get a wonderful quilt from you. Her loss!