San Company produces two types of components, K and P. The unit contribution margin for K is $6; the unit contribution margin for P is $14. Each component must spend time on a special machine which provides 4,000 hours of machine time per year. K requires 15 minutes of machine time; P requires 30 minutes of machine time. Required:

(i) Now suppose that San Company can sell only 5,500 units of each component. How many units of K and P should be produced?

(ii) What are TWO (2) qualitative factors that might affect a keep or drop decision?