Part 1) Talladega Company manufactures an electric clock radio. The company expects production of 5,000 units this year. Currently, Talladega produces the clock used in the product. Talladega has received an offer from Daytona, Inc., to supply the clock. Talladega is considering outsourcing the clock used in the radios. If production of the clock is discontinued the company will be able to eliminate its product-level costs since no other products along the same line are produced by the company. However, due to its concern for quality, the company will have to inspect each clock - as it does now for the clocks it produces. For each item below, indicate whether the item is relevant or irrelevant to the outsourcing decision. a. Purchase cost of clocks from Daytona b. Rental income from the idled facilities c. Material costs to produce clocks d. Inspection costs e. Engineering design costs for clocks - these costs are on-going f. Clock manager salary g. Depreciation on machinery used to produce clocks - the machinery has no market value h. Allocated corporate costs i. Impact on employee morale if production is discontinued Part 2) Hickory Ridge Reproductions manufacturers and sells two kinds of furniture: dressers and china cabinets. The two divisions' most recent financial statements are shown below: Sales Unit-Level Production Costs Unit-Level Selling & Admin. Costs Product-Level Admin. Costs Corporate-Level Allocated Costs Net Income Dresser $800,000 620,000 30,000 6,000 26,000 $118,000 China Cabinet $200,000 150,000 25,000 5,000 28.000 ($8,000) Question: Hickory Ridge is considering eliminating the China Cabinet Division. If they eliminate the China Cabinet Division, the company's net income will _ _(put either "increase" or "decrease in the first blank) by ___ _(calculate a dollar amount and enter in the second blank.)