. Wind breakers manufacturers of sport clothing. They make jackets such as Calm,Windy and Gale. The management has requested an analysis of Gale product due to its low sales and profitability. The sales and costs are summarized as below.

CalmWindyGale

Units sold last year2500187503750

Price ($)303240

Unit variable cost242436

Fixed Cost3.603.603.60

Suppose the firm determines that deleting Gale will release more production capacity to manufacture additional Windy to generate more revenue for the firm. Assume that two production constraints are automated: sewing machine can make 20 Windys or 30 Gales per hour. Inspections require 15 minutes for Windy (4 per hour) and 5 minutes for Gale (12 per hour).currently 3750 gales and 18750 Windys are being manufactured and sold. Sales projections show that sales of windy could be increased to 30000 units of additional capacity available. Advertising costs last year were $20375 for calm, $15000 for windy and $5000 for Gale.

Required

If Windbrakers deletes Gale entirely, how many units can be manufactured with the released capacity?

What is the dollar effect on the net income if wind breakers delete the production of Gale and uses the released capacity for production and sale of Windy

What other factors should be considered in the decision to delete Gale and use the released capacity to produce additional units of Windy?