Drip Inc. manufactures three lines of athletic shoes; Trainer, Court Master, and Speedy. Management has requested an analysis of Speedy due to its low sales and low indicated profitability. All fixed costs are considered unavoidable.

	Trainer	Court Master	Speedy	Total
Units sold last year	25,000	18,750	3,750	47,500
Revenue	$750,000	$600,000	$150,000
Selling price per unit	30.00	32.00	40.00
Variable cost per unit	24.00	24.00	36.00
Contribution Margin per unit	6.00	8.00	4.00
Allocated fixed cost per unit	3.60	3.60	3.60	$171,000
Operating profit per unit	2.40	4.40	0.40

Suppose that Drip determines that dropping the Speedy line will release production capacity so that it can manufacture additional units of Court Master. Assume that the production constraints are the automated sewing machine and the inspection and packaging operation. The automated sewing machine can make 20 pair of Court Masters or 30 pair of Speedys per hour. The inspection and packaging operation requires 15 minutes for a pair of Court Masters (4 per hour) and 5 minutes for a pair of Speedys (12 per hour). Sales projections, determined on the basis of recent marketing analysis show that sales of Court Master could be increased to 30,000 units if additional capacity were available. Required: 1. If Drip deletes Speedy entirely, how many pairs of Court Master can it manufacture solely because of the capacity released by discontinuing the production of Speedy? 2. What is the dollar effect on operating income if Drip drops the production and sale of Speedy and uses this capacity, and only this released capacity for Court Master? 3. What other factors should Drip consider in its decision to drop Speedy and use the released capacity to produce additional pairs of Court Master?