5. Kim Pancey produces a product called Balut. She buys duck eggs, the materials needed to make balut at P11.50 each. To convert the eggs into balut, the same are processed by boiling for about 30 minutes. Processing costs composed of labor and factory overhead average at P10.50 per unit. Kim sells the product at P23 per unit. The balut may be processed further into fried balut which is actually dipping it in bread crumbs or com starch. Fried balut has proven to be salable at P28.00 per unit. To convert the balut into fried balut, additional materials, labor and overhead of P1, P2 and P3, respectively will be incurred. Would you rather sell balut at its original form or process further? Balut Fried Balut P 23.0 P 28.0 Variable cost 11.5 11.5 Processing costs 10.5 16.5 6. Table 1. Sports Hats, Etc. has two product lines: baseball helmets and football helmets. Income statement data for the most recent year follow: Total Baseball Football Helmets Helmets Sales revenue P 460,000 P 310,000 P 150,000 Variable expenses 355.000 235.000 120.000 Contribution margin 105,000 75,000 30,000 Fixed expenses 76.000 38,000 38,000 Operating income (loss) P.29.000 P.37,000 P (8,000) Refer to Table 1. Assuming fixed costs remain unchanged; dropping the Football Helmet line would result in: a) increase in total operating income of ~) increase in total operating income of P P 8,000 38,000 b) decrease in total operating income of d) decrease in total operating income P 150,000 of P 30,000 Baseball Helmets Sales revenue P 310,000 Variable expenses 235,000 Contribution margin 75,000 Fixed costs (76,000) Refer to Table 1. IfP 20,000 of fixed costs will be eliminated by dropping the Football Helmet line, operating income would: decrease P 10,000 c) decrease P 28,000 ge increase P 12,000 d) increase P 20,000 Baseball Helmets Sales revenue P 310,000 Variable expenses 235,000 Contribution margm 75,000 Fixed costs 56,000)