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. If Talladega discontinues production of the clock, the company will be able to eliminate its product$-$level costs because 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. Various costs and items are described below: 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. If Talladega

discontinues production of the clock, the company will be able to eliminate its product$-$level costs because 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.

Various costs and items are described below:

Required:

Select the appropriate classification of the cost item from the drop$-$down that best describes the item in the context of the described

outsourcing decision. A cost varies if the amount of the cost or the incurrence of the cost differs between the two alternatives:

continuing to make the clocks or purchasing the clocks from Daytona.

Required:

Select the appropriate classification of the cost item from the drop$-$down that best describes the item in the context of the described outsourcing decision. A cost varies if the amount of the cost or the incurrence of the cost differs between the two alternatives: continuing to make the clocks or purchasing the clocks from Daytona.