The introduction of resealable soft drinks bottles greatly reduced the sale of bottle sealers of Pawn Plastic Products. The products operating results in a recent month is presented below:
Sales (50,000 units) 70,000
Cost of sales 80,000
Loss on sales (10,000)
Selling and administrative costs 20,000
Total loss (30,000)

Total fixed costs included in the cost of sales and selling and administrative costs amount to P40,000. Seventy-five percent of this total represents fixed factory overhead.

In view of the losses incurred in the production and sale of bottle sealers, the company is considering to eliminate this product and use the facilities in the manufacture of another product, threaded bottle caps.

The company expects to sell 25,000 units of the new product at P1.50 per unit. Estimated unit variable costs for this product is P1.10. the present total fixed cost is expected to increase by P5,000 per period due to the acquisition of additional equipments needed in the in the manufacture of threaded bottle caps.

Required:
Choose the best alternative. Show your computation to support your answer
a. Continue producing and selling bottle sealers.
b. Eliminate bottle sealers and leave the facilities idle.
c. Eliminated bottle sealers and produce threaded bottle caps.