REPUBLIC OF THE PHILIPPINES

Department of Education
REGION VII, CENTRAL VISAYAS
DIVISION OF CEBU PROVINCE
CONSOLACION NATIONAL HIGH SCHOOL-DAY CLASS
PUBLIC TECHNICAL-VOCATIONAL
POBLACION OCCIDENTAL, CONSOLACION, CEBU
CONTACT NO. 423-9200

COMPETENCY-BASED
CURRICULUM

ENTREPRENEURSHIP
10
(NAME)

(Grade & Section)

“THE ENTREPRENEUR
1
Always searches for change,
responds to it and exploits it
--------as an---------
OPPORTUNITY”

ABIGAIL P. ROSACEÑA
Subject Teacher

FINALIZING EVALUATED BUSINESS PLAN

WHAT DO YOU ALREADY KNOW?

PRETEST

Let us find how much you have already

know about the process of evaluating a

2
 business plan. Encircle the letter of
your best answer.

1. The description of the target market is found in the

_________ part of the business plan.
a. Marketing Plan c. Operating Strategies
b. Marketing Strategies d. Production Strategies

2. Detailed description of products or services is in

what part of the business plan?
a. Marketing Plan
b. Production and Technical Plan
c. Operation Plan
d. Organization and Management Plan

3. Which part of the business plan describes how the

business has solved the problems?
a. Statement of Vision
b. Marketing Plan
c. Problem need
d. Production Technical Plan

4. Which part of the business plan presents the data

on how the products/service will be further
developed.
a. Financial Plan
b. Marketing Plan
c. Production Plan
d. Operation and Technical Plan

5. What part of the business plan presents a clear

statement of values critical to culture, integrity
and activities of the business?
a. Marketing Plan
b. Production Plan
c. Operational Plan
d. Statement of Vision, Mission and Values

LESSON I
FINALIZING EVALUATED BUSINESS PLAN

WHAT IS THIS LESSON ABOUT?

3
 This lesson deals with how to critically evaluate
a business plan in order to come up with a final
form.

WHAT WILL YOU LEARN?

At the end of the lesson, you should be able to:
 Finalize the evaluated business plan
based on the set of criteria.
 Appreciate the importance of using
business plan.

LET US STUDY

WORDS TO STUDY
 BUSINESS PLAN - is a step by step guide in the
thorough operation of the business enterprise.
 ENTERPRISE - is a project activity commercial or
industrial. It may also be an organizational
activity.
 ASSESSMENT TOOL - is an instrument used to
evaluate a performance.
 EVALUATION - is a rigorous analysis of
completed or ongoing activities that determine
or support management
accountability, effectiveness, and efficiency.
 COMPONENT -is a uniquely identifiable input,
part, piece, assembly or sub-assembly, system
or sub system that:
1. is required to complete or finish an activity,
item, or job.
2. Performs a distinctive and necessary function
in the operation of a system or
3. is identified to be included as a part of a
finished, packaged, and labeled item.
 CRITERIA - is the statement of need, rules,
standards, or tests that must be used in
evaluating a decision, idea, opportunity,
program, projects, etc. to form correct
judgment intended goal.

Let us study an example of business plan with complete

parts.
SAMPLE BUSINESS PLAN

4
PUMPKIN SORBET
 Since it is new in the business line of
MBHS, it initially aims to capture 10% of the
existing market shares which is currently
5
dominated by school canteen’s Kyla’s Ice Cream.
And Creamline Ice Cream and Dan Eric’s Ice Cream
which is located within the Espeleta Street.
II. Overview of the Business
A. Pumpkin Sorbet

B. Pumpkin Sorbet is both the business name and the

name of its primary products. It is cooperative in nature.
Specifically, it will produce a pumpkin-flavored ice
sorbet that will be dressed in sprinkles, marshmallows
and peanuts that will surely fit and guarantee clientele’s
satisfaction. It combines innovativeness and creativity in
product concepts such as ice cream with pumpkin as the
main ingredient. Dominating the existing ice cream
businesses in Buli as well as in Muntinlupa will be its
main thrust.

C. It envisions to be the leading provider of high quality

but affordable ice cream in Muntinlupa. Continues
innovation of the product will be processed to supply the
needs of Muntinlupeňos. Also, it will help ease the
malnutrition in Muntinlupa through the help of pumpkin-
flavoured ice cream and somehow help the squash
farmers in terms of increasing the consumption and
demand of squash in the city.

III. Business Plan

The Needs
A. Malnutrition is one of the major problems, Filipinos
school children are facing6 nowadays. Malnutrition
means lacking the right nutrition needed by the body
resulting which may result to poor academic
IV. Vision, Mission and Values
7
Vision
V. Market Profile
A. Research and Analysis
Today’s sorbet stalls
8 are believed to have a
little improvement for customer’s satisfaction. The
proponents decided that they must undergo a careful
 Feeding Program Members
Populac MB MBH Alaban Sucat Buli Cupan TOTAL
e HS S g g
HS ES ES ES ES

Total 3,160 60 87 84 45 68 3,504

Daily 316 36 52 50 27 49 530

Monthly 6,952 792 1,144 1,100 594 1,078 11,660
Yearly 83,424 9,504 13,728 13,200 7,128 12,936 139,200

Based on the given consumer groups, the

daily, monthly, and yearly target buyers are reflected
through the assumption that 10% from MBHS group will buy
ice cream from Pumpkin Sorbet and 60% from those feeding
program members will buy every three days. During
summer vacation, Pumpkin 9 Sorbet will only serve their
products in different hospitals where we can assure the sale
and can help patient in sustaining their health.
VI. Production/Technical Plan
A. Product Description
Pumpkin Sorbet is a business selling a pumpkin-
flavoured sorbet. The finished product will be placed
in a plastic cup and depending on the consumers,
they will choose if they want their sorbet to have a
dressing (sprinkles) or added flavour. The product as
researched was proven nutritious palatable. Today’s
Ice Creams are not that nutritious and of with poor
quality. Pumpkin Sorbet made it with a new twist by
means of using vegetable like squash as the main
ingredient. The individual finished products will be
package in a cup with design. There will also be
packaging for wholesale purchases

B. Operating Strategies
The business will produce a pumpkin sorbet
station with high quality contents and nutritious value
as well. Pumpkin Sorbet will need raw materials to
produce the goods to be sold. These include All-
Purpose Cream, Condensed Milk, Cassava Starch,
Cheese, Gelatin Powder, Powdered Milk, Vanilla
Essence, and the main ingredients, Pumpkin. The
proponents will be the one to produce the product.
Raw materials will be purchased at Alabang Market or
Lianas Supermarket where we can assure the quality
and the aspects of perish ability. The proponents tried
to interview the teachers and some students by
offering them a free taste and made a comment after.
During the operation, the business will think of more
ideas on how to create more appealing and attractive
products.

C. Critical Risk

Table 2
Pumpkin Sorbet’s Position in the Market
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 Competitors Market Target
Share
Kyla’s Ice Cream 35% 30%
Dan Eric’s Ice Cream 45% 40%
Cream Line Ice 20% 20%
Cream
Pumpkin Sorbet 10%

VII. Organizational Plan

A. Team Members

Figure 1: Organizational Chart

B. Contribution to the Business

 Owners– it is responsible for the management

and accountability of the business itself, at the
same time they are the ones who will produce
the product.

 Sales Personnel – it is responsible for the

advertisement, selling promotion of the
product.

VIII. Operational Plan

A. Workflow

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IX. Sustainability

I. Financial Plan

Pumpkin Sorbet will need at least PhP 90,000.00 to

start its operation in the market. This will be coming
from the investments of the students who are willing
to be involved in entrepreneurial practice like this.
Also, since two of the proponents are Club Presidents
and the other one is MBHS Chorale Leader, they may
combine their talents to conduct fund raising activities
to increase the capital investment of the business.
12
 Table 3 shows the variable and fixed cost in the
operation of Pumpkin Sorbet. This will serve as basis for
computing the breakeven point sales price and volume. Based
on the total FC & VC, the business can produce 286 gallons per
month.

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14
II. Social Impact

A. Long- Term Desired Outcomes

Pumpkin Sorbet will supply the feeding program
members in different schools near the location including
Alabang Elementary School, Cupang Elementary School, Buli
Elementary School and Sucat Elementary School. The
proponents will also prioritize the patient in the hospital.
They are currently on negotiation with the Principals of
Cupang, Buli, and Alabang Elementary schools regarding the
inclusion of the pumpkin sorbet in the dietary supplement
among the students in the school’s feeding program. Thus,
Pumpkin Sorbet expect that within three years of operation
it can fund its own feeding 15 program and an advocacy
program for squash growing framers as part of their
corporate social responsibility.
LET US REMEMBER
Business Plan is a blueprint to guide your
business policies, operation, and strategies. It details
the past, present and forecasted performance of your
business.

LET US APPLY WHAT YOU HAVE LEARNED

ACTIVITY:

1.1 Based on the given example of a business plan

with its major components, formulate ONE

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question per component to test if a business plan
meets a given standard using the rubric
COMPONENT QUESTION
I. Executive Summary
II. Overview of the Business
III. The Problem/Need
IV. Statement of Vision, Mission, and
Values
V. Marketing Plan
VI. Production and Technical Plan
VII. Organizational/Management Plan
VIII. Operational Plan
IX. Sustainability
X. Overall Question

1.2 Based on the given example of a business plan

with its major components, write the answer of
the following questions.

________________1. Who will run the Pumpkin Sorbet Business?

________________2. Pumpkin Sorbet is a product made of what
vegetable?
________________3. What is the major problem cited by the
proponent in establishing the Pumpkin Sorbet Business?
________________4. What is the vision of the Pumpkin Sorbet
Business? (give one sentence only)
________________5. How many percent does Pumpkin Sorbet sets
to achieve the return on equity after two years of operation?
________________6. What are the values that Pumpkin Sorbet
wants to employ? (Give 3 values)
________________7. What is the target market of the Pumpkin
Sorbet Business? (complete)
________________8. What is the final main packaging of the
Pumpkin Sorbet?
________________9. What is the main ingredient of Pumpkin
Sorbet?
________________10. What is the first step in the workflow of the
operation plan of the Pumpkin Sorbet Business?

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________________11. How many gallons of ice cream does
Pumpkin Sorbet will manufacture per day?
________________12. How much does Pumpkin Sorbet will need to
start its operation in the market?
________________13. How much is the yearly projected revenue of
the business?
________________14. Based on the Projected Income Statement,
how much is the projected net income by 2010?
________________15. Projected Income for the year is expected to
rise by how many percent?

HOW MUCH HAVE YOU LEARNED?

POST TEST
Direction: Identify what component of business plan can
these statements be found. Write your answer on the
space provided.

________________1. This part of the business plan presents a clear

statement of values to culture, integrity and activities of the
business.
________________2. This part of the business plan presents the
data on how the products/service will be further developed.

________________3. This part of the business plan describes how

the business has solved the problems.

________________4. This part presents the detailed description o

the products or services.

________________5. This component formulated the description of

target market.
DUTIES AND FUNCTIONS OF AN ENTERPRISE OWNER

WHAT DO YOU ALREADY KNOW?

PRETEST
Let us find how much you have already
know about the duties and functions of an
enterprise owner. Answer the questions below
honestly. Encircle the letter of your best answer.

1. The management approach that supports the principle of

putting the right person in the right job is called___________.
18
a. behavioral approach
b. contingency approach
c. scientific management approach
d. systems approach

2. The diagram that shows the position of a person in the

company and the corresponding authorities, responsibilities and
accountabilities of such position is called a ___________.
a. accountability diagram
b. conduct job analysis
c. organizational diagram
d. status symbol

3. This is one of the steps in learning your personnel

requirements.
a. assesses the strength and weaknesses of the present
employees
b. conduct job analysis
c. determines the workload in the company
d. all of the above

4. One way to meet extreme needs is through_________.

a. insurance plans
b. promotion
c. rest period
d. drinking water

5. A grievance system is a form of which type of

communication?
a. Downward communication
b. Upward communication
c. Lateral communication
d. Horizontal communication

6. A leadership skill that refers to the ability to grasp the

relationship of different parts into an integrated whole and to
analyze data is called____________.
a. conceptual skill
b. human relations skill
c. technical skill
d. all of the above

7. This type of leader leaves his subordinates alone to establish

their goals and solve their problems.
a. autocratic leader
b. democratic leader
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c. laissez-faire leader
d. bureaucratic leader

8. In Planning, it represents the needs towards which all

organizational efforts are directed.
a. budget
b. objectives
c. policies
d. rules

9. In Maslow’s Model of Hierarchy of Needs, the level that refers

to the need to develop one’s potential and creation to the fullest
is called __________.
a. esteem needs
b. security needs
c. self – actualization
d. physiological needs

10. The term that refers to the evaluation of the overall

performance of the firm is called______________.
a. employee’s evaluation
b. operational control
c. organizational control
d. qualify control

LESSON 2
DUTIES AND FUNCTIONS OF AN ENTERPRISE OWNER

WHAT IS THIS LESSON ABOUT?

This lesson the recalls the duties and functions of
an enterprise owner.

WHAT WILL YOU LEARN?

At the end of the lesson, you should be able to:
 Recall duties and functions of an
enterprise owner

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LET US STUDY
A s y o u

WORDS TO STUDY

 PLANNING - is thinking before a particular

task is done.

 ORGANIZING - means assembling the

essential resources to execute the
developed plans.

 STAFFING - is the proper and effective

selection, appraisal and development of
personnel to do the jobs and fulfill the
roles in the structure. accountability,
effectiveness, and efficiency.


 DIRECTING - involves the guiding, leading

and supervision of the employees for the
achievement of organizational goals.

 CONTROLLING - means making sure that

activities done in the enterprise are in
conformity with what has been planned.

organize resources and run the business. This denotes

ownership of the enterprise. Managers may or may not be
necessarily the owners of the company although they run it.
They can be just mere employees. The functions of
management are uniquely described as manager’s job.
Managerial functions are the same for all organizations
regardless of size or type. The only difference is the amount of
emphasis given to each staffing, directing, and controlling.

1. PLANNING

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 This is the function of management that involves setting
of objectives and determining the course of action for achieving
these objectives.

Environmental
Scanning

PLANNING Establishing Objectives

Identifying alternative
courses of action

Evaluating various
alternatives

Making decisions
about the best course
of actions

TACTICAL STRATEGIC OPERATIONAL

(intermediate- (long-range)
(short-range
range)

2. ORGANIZING

The task of organizing involves defining the specific

activities necessary to achieve the enterprise goals, clustering
the activities into departments or job positions and designating
the personnel to head and compose each department.

An organizational diagram showing the organizational

relationships of the position and their corresponding authority,
responsibility and accountability is called the organizational
chart.

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 Authority is the right that a manager has to require a
subordinate to accomplish something. Authority can be
delegated.

Responsibility is the duty of the manager that one has to

fulfill in connection with the performance of his job.
Responsibility cannot be delegated.

Accountability, like responsibility cannot be delegated.

This is the situation of being answerable to higher authorities.

TYPES OF ORGANIZATIONAL DIAGRAM

A. Line Organization
Direct command of superiors over workers who
accomplish the task. The officers of the operating units receive
orders from their higher authority and relay to their
subordinates.

Example:

Manager

Supervisor

Foreman

Worker
B. Line and Staff
The president hires to handle specialized activities which
a line officer cannot handle the legal counsel helps and advise
the president and does not have authority over the line
employee.

Example:

President
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C. Functional Type
This structure focuses on the functions or types of
activities in each unit. It is expected that the worker has one or
more immediate supervisor

Example:

Manager

Supervisor Workers

Leadman

Production Production
Officer Manager

Workers Workers

D. Committee Type
This form of organization represents a group of persons
who may fulfill functional staff or line duties, as contrasted with
a one – man performer who runs the organization single –
handedly. An example is an executive committee which is
tasked to plan and formulate decisions in a company.

3. STAFFING
The organizational framework needs to be flashed out by
people who will man the positions.

Quantity and Workload

Quality of
Personnel Needed Assessment

Workers Vs
Required Skills
and Abilities Job Analysis
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4. DIRECTING
Directing involves putting your plans into effect.
MOTIVATIO
Maslow’s Hierarchy
Behavioral Approach of Needs
(Maslow's Hierarchy of Needs)
N

upward
Leadership Skill
(reports, grievance systems,
gatherings, suggestions box)

lateral
Communication (mentoring, gossips, rumors,
conversation during breaks)

downward
(notice, circulars, bulletins,
handbooks, annual reports)

LEADERSHIP SKILLS

TYPES OF COMMUNICATION

Lateral Communication

informal 25
is predominantly
and occurs
daily between
employees and
managers
5. CONTROLLING
Making sure that what is done in the enterprise conforms
with what has been planned.

CHARACTERISTICS OF
Proper
Activities
CONTROLING Timely

Cost Effective

Accurate

STEPS IN CONTROLLING PROCESS

Measure
Establish Set Compare
Actual
Standard Performance Performance
Performance

TYPES OF CONTROL

a. Organizational control – measure the overall

performance of the organization.

b. Operational control – evaluate day to day activities

and spot areas here you may need to take corrective
actions.

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LET US REMEMBER
In a business enterprise, it is important to have
an organizational structure because it determines the
level of authority, duties and functions of each
manager and worker.

LET US APPLY WHAT YOU HAVE LEARNED

ACTIVITY:

2.1 Fill in the diagram with the five (5) basic functions of
an enterprise owner.

1.

2.

3.

4.

5.

2.2 TRUE OR FALSE. Write True if the statement is correct and

False if it is wrong.

___________1. Planning is the most basic management function.

___________2. Organizing means putting your plans into effect.
___________3. Conversation breaks is a form of downward
communication.
___________4. Systems Approach is an approach to psychology
that focuses on how one's environment and how external
stimuli affect a person's mental states.
___________5. Authoritarian leader focuses on people.
___________6. Physiological needs include food, water, and air.
___________7. The management functions can be interchanged.
___________8. Line Organization directed command of superiors
over workers who accomplish the task.
___________9. Report is an example of Upward Communication
___________10. Laisse Faire is permissive in nature.
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 HOW MUCH HAVE YOU LEARNED?
POST TEST

Direction: Identify the following terms that best describe

the statements.

_________________1. It is the term that refers to the evaluation of

the overall performance of the firm.

_________________2. What do you call the level that refers to the

need to develop one’s potential and creation to the fullest in
Maslow’s Model of Hierarchy of Needs?

_________________3. It represents the needs towards which all

organizational efforts are directed.

_________________4. This type of leader leaves his subordinates

alone to establish their goals and solve their problems.

_________________5. What do you call a leadership skill that refers

to the ability to grasp the relationship of different parts into an
integrated whole and to analyze data?

_________________6. A grievance system is a form of which type

of communication?

_________________7. One way to meet extreme needs is through

(Insurance plans, Promotion, Rest period, drinking water)-
choose one

_________________8. Give one of the steps in learning your

personnel requirements.

_________________9. What do you call the diagram that shows the

position of a person in the company and the corresponding
authority’s responsibilities and accountabilities of such position?

________________10. What do you call the management approach

that supports the principle of putting the right person in the
right job?

BASIC ACCOUNTING
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 WHAT DO YOU ALREADY KNOW?
PRE-TEST
Let us find how much you have already
know about the fundamentals of financial aspect
of the business. Answer the questions below
honestly. Encircle the letter of your best answer.

1. Accounting is a service activity. Its function is to provide

a. quantitative information c. quantitative and qualitative information
b. qualitative information d. none of the choices
2. The basic purpose of accounting is
a. to provide the information that the managers of an economic entity need to
control its operations
b. to provide information that the creditors of an economic entity can use in
deciding whether to make loans
c. to measure the periodic income of the economic entity
d. to provide quantitative financial information about a business enterprise that is
useful in making rational decision
3. The resources owned by a business are called:
a. assets b. liabilities c. accounting equation d. owner’s equity
4. The debts of the business are called:
a. assets b. liabilities c. accounting equation d. owner’s equity
5. The rights of the owners are called
a. assets c. liabilities
b. accounting equation d. owner’s equity
6. The components of a balance sheet equation are
a. assets, income and owner’s equity c. assets, liabilities, and owner’s equity
b. income, expenses and profit d. investments, withdrawals, and profit
7. The following can be found in an income statement except
a. income b. assets c. expenses d. profit or loss
8. A current asset which include coins, currencies and bank deposits is called
a. cash equivalent b. notes receivable c. accounts receivable d. cash
9. Which of the following is not subject to depreciation?
a. building b. land c. equipment d. machinery
10. Which of the following equations is correct?
a. Assets + Capital = Liabilities c. Capital = Assets + Liabilities
b. Liabilities – Capital = Assets d. Capital= Assets – Liabilities

11. Which of the following is correct?

Assets Liabilities Capital

29
a. 7,850 1,250 6,600
b. 8,200 2,800 11,000
c. 9,550 1,150 8,200
d. 5420 6,540 1,120
12. Which of the following is a liability of a firm?
a. building owned c. money borrowed by the firm
b. cash in firm’s safe d. equipment
13. Entries recorded on the right side of any account are called
a. increases b. credits c. decreases d. debits
14. All the followings are assets except
a. unearned revenue c. equipment
b. cash d. inventory
15. An account has two sides called the
a. debit and credit c. income and expense
b. asset and liability d. journal and pen
16. A chart of account is a (an)
a. flowchart of all transactions c. accounting procedure
b. list of names of all account titles d. journal
17. Entries recorded on the left side of any account are called
a. increases b. credits c. decreases d. debits
18. Which of the following is an intangible asset?
a. trademarks c. patents
b. copyrights d. all of the above
19. Which of the following is a liability?
a. accounts payable c. cash
b. accounts receivable d. equipment
20. The acquisition of an asset on credit
a. increases assets and owner’s equity
b. increases assets and liabilities
c. decreases assets and increases liabilities
d. leaves total assets unchanged

LESSON 3

30
 BASIC ACCOUNTING

WHAT IS THIS LESSON ABOUT?

This lesson provides in basic knowledge in the
financial aspect of the business.

WHAT WILL YOU LEARN?

At the end of the lesson, you should be able to:
 Demonstrate understanding in
assessing financial assessment
tasks in operating a small business
competently.

Accounting – is a service activity. Its function is to provide

quantitative information.

FIVE FINANCIAL REPORTS:

1. BALANCE SHEET/ FINANCIAL POSITION
2. INCOME STATEMENT/ FINANCIAL PERFORMANCE
3. STATEMENT OF OWNER’S EQUITY
4. STATEMENT OF CASH FLOWS
5. DISCLOSURE

I. BALANCE SHEET
Elements of Balance Sheet:
1. ASSETS – resource controlled by the enterprise as a result of
past events and from which future economic benefits are
expected to flow to the enterprise.

TWO TYPES of ASSETS

A. CURRENT ASSETS – per Philippine Accounting Standards,

assets are classified as current when it is expected to be
realized or is held for sale or consumption in the normal course
of the enterprise’s operating cycle or for the short term and
expected to be realized within twelve months of the balance
sheet date.
a.1. Cash – is any medium of exchange that a bank will
accept for deposit. It includes coins, currency, checks, money
orders, bank deposits and drafts.
a.2. Cash Equivalents – these are short-term, highly
liquid investments that are readily convertible to known
amounts of cash and which are subject to insignificant risk of
changes in value.

31
 a.3. Notes Receivable – written pledge that customer will
pay the business a fixed amount of money on a certain date. It
is assumed as promissory note.
a.4. Accounts Receivable – these are claims against
customers arising from sale of services or goods on credit.
a.5. Inventories – these are assets which are held for sale
in the ordinary course of the business, in the process of
production for such sale or in the form of materials or supplies
to be consumed in the production process or in the rendering of
services.
a.6. Prepaid Expenses – these are expenses paid for by
the business in advance. Example for this are insurance and
rent.

B. NON-CURRENT ASSETS or FIXED ASSETS – these are

long term tangible assets used in the production or supply of
goods and services, for rentals and for administrative purposes.
b.1. Land
b.2. Building
b.3. Machinery
b.4. Furniture and Fixtures
b.5. Motor Vehicles
b.6. Equipment
b.7. Accumulated Depreciation – it is a contra account
that contains the sum of the periodic depreciation charges.
b.8. Intangible Assets – these are identifiable,
nonmonetary assets without physical substance held for use in
the production or supply of goods or services for rental to others
or for administrative purposes.
Examples: goodwill, patents, copyrights, licenses, franchises,
trademarks, brand names, subscription lists

2. LIABILITIES – these are legal obligations of the firm

TWO TYPES OF LIABILITIES

A. CURRENT LIABILITIES – is expected to be settled within

twelve months of the balance sheet date.
a.1. Accounts Payable – represents the reverse
relationship of the accounts receivable. Buyer agrees to pay for
them in the near future.
a.2. Notes Payable – business entity is the maker of the
note.
a.3. Accrued Liabilities – amounts owed to others for
unpaid expenses. Example: salaries payable, utilities payable,
interest payable and tax payable
32
 a.4. Unearned Revenues – when business entity receives
payment before providing its customers with goods or services.
B. NON-CURRENT LIABILITIES – these are long-term debts by
the firm
b.1. Mortgage Payable – this account records long-term
debt of the business entity for which the business entity has
pledges certain assets as security to the creditor. In the event
that the debt payments are not made, the creditor can foreclose
or cause the mortgaged asset to be sold to enable the entity to
settle the claim.
b.2. Bonds Payable – the bond is a contract between the
issuer and the lender specifying the terms of repayment and the
interest to be charged.

3. OWNER’S EQUITY – these proportion of the total value of a

company’s assets that can computed after deducted by the
liabilities.
3.1 Capital – this account is used to record the original
and additional investments of the owner of the business entity.
3.2. Withdrawals – when the owner of a business entity
withdraws cash or other assets such are recorded in the
drawing or withdrawal account rather than directly reducing the
owner’s equity account.

II. INCOME STATEMENT

A. INCOME – is money that an individual or business receives
in exchange for providing a good or service.
a.1. Service Income – revenues earned by performing
services for a customer or client.
a.2. Sales – revenues earned as a result of sale of
merchandise

B. EXPENSES – is the cost of operations that a company incurs

to generate revenue.
b.1. Cost of Sales/ Cost of Goods Sold – the cost incurred
to purchase the products sold to customers during the period.
b.2. Salaries or Wages Expense – includes all payments
as result of an employer-employee relationship
b.3. Telecommunications, Electricity, Fuel and Water

Expenses
b.4. Rent Expense
b.5. Supplies Expense
b.6. Insurance Expense
b.7. Depreciation Expense

33
 b.8. Uncollectible Accounts Expense
b.9. Interest Expense

III. STATEMENT OF OWNER’S EQUITY

– portrays changes in the capital balance of a business over a
reporting period.

IV. STATEMENT OF CASH FLOWS

– is financial statement that shows how changes in balance
sheet accounts and income affect cash and cash equivalents.

V. DISCLOSURE
– is an official document that outlines the terms, conditions,
risks and rules of a financial transaction, such as a loan or an
investment.

LET US REMEMBER
The law requires that some forms of records
must be kept by all businesses. In the time of
keen competition, rising cost and increasing taxes, there can
be no alternative to record keeping. There must be complete
accounting of all business transactions to efficiently handle
purchases and sales inventory control credit and collection,
depreciation and other expenses.

LET US APPLY WHAT YOU HAVE LEARNED

ACTIVITY:
3.1. Identify whether CURRENT ASSET or
NON-CURRENT ASSET.

________________1. Building ______________7. Patent

________________2. Cash Equivalents ______________8. Equipment

________________3. Prepaid Expenses _____________9.

Inventories

________________4. Notes Receivable _____________10. Cash

________________5. Accumulated Depreciation

________________6. Land

34
3.2. Identify whether CURRENT LIABILITY or NON-
CURRENT LIABILITY.
___________________________1. Bonds Payable
___________________________2. Accounts Payable
___________________________3. Interest Payable
___________________________4. Unearned Revenues
___________________________5. Mortgage Payable
3.3. Identify whether CURRENT ASSET, NON-CURRENT
ASSET, CURRENT LIABILITY, NON-CURRENT LIABILITY or
OWNER’S EQUITY.

________________________________1. Withdrawal
________________________________2. Notes Payable
________________________________3. Accounts Receivable
________________________________4. Capital
________________________________5. Vehicle
________________________________6. Land
________________________________7. Bonds Payable
________________________________8. Inventories
________________________________9. Cash
________________________________10. Accumulated Depreciation
________________________________11. Mortgage Payable
________________________________12. Copyrights
________________________________13. Accounts Payable
________________________________14. Prepaid Insurance
________________________________15. Salaries Payable

3.4. Identify the following account whether INCOME or

EXPENSES.

________________1. Cost of Sales

________________2. Utilities Expense
________________3. Sales
________________4. Service Income
35
________________5. Uncollectible Accounts

RODRIGUEZ FORWARDERS
Balance Sheet
December 31, 2018

ASSET
Current Assets
Cash 199,000
Accounts Receivable 28,000
Supplies 12,000
Non-Current Asset
Service Vehicle 380,000___________
TOTAL ASSETS 619,000

LIABILITES
Current Liabilities
Accounts Payable 32,000
Notes Payable 303,500___________
TOTAL LIABILITIES 335,500

OWNER’S EQUITY
Capital 283,500
TOTAL LIABILITIES AND OWNER’S EQUITY 619,000

RODRIGUEZ FORWARDERS
Income Statement
December 31, 2018

INCOME
Car Rentals 1,240,000

EXPENSES
Repair Expense 123,500
Salaries Expense 265,000
Fuel Expense 240,000
Depreciation Expense 80,000
Insurance Expense 30,000
TOTAL EXPENSES (738,500)
NET PROFIT 501,500

3.5. Make a balance sheet statement and income statement using same
heading above.
Cash- 5,900 Rent Expense – 800 Supplies Expense –800
Accounts Payable – 400 Fees Earned – 75,000 Utilities Expense - 450

36
Accounts Receivable – 550 Capital – 26,050
Wage Expense – 2,125 Land – 20,000
NORMAL BALANCE OF AN ACCOUNT

T-ACCOUNT
NAME OF ACCOUNT
DEBIT CREDIT
LEFT SIDE RIGHT SIDE

BALANCE SHEET ACCOUNT

ASSETS LIABILITIES AND OWNER’S E
DEBIT CREDIT DEBIT

INCREASE DECREASE DECREASE

EXEMPTION: EXEMPTION:
ACCUMULATE WITHDRAWAL
DEPRECIATION

INCOME STATEMENT ACCOUNT

INCOME EXP
DEBIT CREDIT DEBIT

DECREASE INCREASE INCREASE

3.6. Identify whether DEBIT or CREDIT

1. BONDS PAYABLE - ___________________________
2. UNEARNED REVENUE - ___________________________
3. SALES - ___________________________
4. UTILITIES EXPENSE - ___________________________
37
5. VEHICLE - ___________________________

Useful Financial Ratios

Ratios are mathematical comparisons that can be used

to provide a very effective indicator of the financial progress of
a company at any given time.

These ratios do not have to be difficult though this may

sound very technical on your part as a student, you will only be
needing a few of these ratios in your business. You are primarily
looking for trends.

To successfully manage your business, you need to be

able to understand and interpret these ratios.

Financial ratio is one of the most common methods in

interpreting analyzing financial statements.
Financial Ratio Analysis methods are:

a. Profitability Ratio
b. Liquidity Ratio
c. Efficiency Ratio
d. Financial Structure Ratio

In computing the financial ratio analysis, you need the following

accounting records:

1. Income Statement
2. Two-Column Balance Sheet
3. Projected Income Statement
4. Projected Balance Sheet

38
A. PROFITABILITY RATIO
1. Gross Profit Margin (GPM)
This ratio represents the average gross profit generated
by each peso of sales.

Gross profit Margin = (Gross profit / Net sales) ×

100

2. Net Profit Margin (NPM)

The ratio represents the average „net‟ profit earned by
each peso of sales. It reflects profitability after the operating
costs of doing business have been deducted from gross profit.

Net Profit Margin = (Net Profit before tax/Sales) x

100

3. Return on Assets (ROA)

This analysis focuses on the earning performance of your
enterprise’s assets. You will need to look into Income Statement
in the Balance Sheet to compute the ROA.

Return On Assets = (Net Profit before tax/Total Assets) x

100

4. Return on Owner’s Equity (ROE/ROI)

The earning power of the owner’s investment in the
business is measured in terms of ratio between the net profit
before tax and the owners‟ equity.
The Owner’s Equity is equal the Net Assets (total assets
minus total liabilities). If there are no liabilities, then it is equal
to return on assets. This only happens if your business will not
resort to borrowing from loan companies. In most cases though,
the owner’s equity is always less than 100% of the assets
employed and the return on owner’s equity may be different
from the return on assets.

Return On Owner’s Equity = (Net Profit before tax/OE) x

100

B. LIQUIDITY RATIO
1. Current Ratio

39
 This is the relationship between the current assets and
he current liabilities.

Current Ratio = (Current Asset/Current Liabilities)

2. Liquid Ratio
One of the tools to assess the enterprise’s capacity to
pay its obligations is liquidity. Many loan providers prefer to
evaluate the business ability to pay in terms of liquid ratio. This
is the difference between the current asset and the inventory
divided by the current liabilities.

Liquid Ratio= Current Asset – Inventory/Total

Assets

C. EFFICIENCY RATIO
1. Asset Turnover
the measure of how effectively the enterprise’s assets
are working to generate sales.

Asset Turnover= Sales/Total Assets) x 100

2. Accounts Receivable Turnover (ART)

It reflects promptness of the business in collecting
accounts receivables from customers. Ideally, the faster
accounts receivables are collected, the better.

 Accounts Receivable Turnover = Sales/ART) x

100
 Average Collection Period = 360 days/ART

3. Inventory Turnover
This is the ratio which reflects how fast the inventory
turns over or sells during the year. The ideal is for you to aim at
the highest rate of inventory turnover without too many stocks
outs and lost sales.

Inventory Turnover = Cost of Goods Sold/Inventory

Ending

D. FINANCIAL RATIO STRUCTURE

40
 It refers to the relationship between the debt and equity
of the business. This relationship determines who really owns
the business, the owner or the creditor.

Ownership Ratio = (Owner’s Equity/Total Asset) x

100

PREPARING FINANCIAL STATEMENTS

HOW MUCH HAVE YOU LEARNED?

POST TEST

PROBLEM #1
Rovic de Leon opened a dormitory locator business near a college campus. She
is the owner of the proprietorship which she named Dormitory Locators. During
the first month of operations, July 2006, De Leon engaged in the following
transactions:
a. De Leon invested P350,000 of personal funds to start the business.
b. Purchased on account office supplies costing P3,500.
c. De Leon paid P300,000 cash to acquire a parcel lot near an access
road to a college campus. She intends to use the land as a future sit for
her own boutique dormitory.
d. De Leon pre-qualified and signed – up clients for dormitory owners.
She received cash of P19,000.
e. Paid P1,000 on the account payable she created in transaction (b).
f. Paid P2,000 of personal funds for a vacation.
g. Paid for office rent P4,000 and for utilities P1,000.
h. Sold some office supplies to another business at cost P1,500.
i. Withdrew P12,000 for personal use.

Accounts to be used: cash, capital, land, accounts payable, service revenue,

office supplies, rent and utilities, withdrawal, personal expenses.
Required: Record the transactions.
PROBLEM #2
Martin Penaco formed the Liceo Sign Company on October 1, 2006. He
deposited P250,000 in PCIBank under the name of the new business entity.
During the month of October 2006, the following transactions occurred:

Oct. 2 Acquired a service vehicle in the amount of P195,000 on account.

3 Acquired supplies for cash, P57,000.
9 Received P87,500 cash for signs painted.
10 Paid the month’s rent, P25,000.

41
 11 Painted signs for Cagayan Company on account, P170,000.
12 Paid P55,000 on account from Oct. 2.
16 Withdrew P25,000 for personal use.
23 Collected P35,000 from Cagayan Company.
27 Paid salaries P57,000 for the month.
30 Paid BayanTel P7,500 for communication services for the month.
31 Paid a bill from AdAsia for P5,500 of advertising for the month.

Accounts to be used: cash, accounts receivable, supplies, service vehicle,

accounts payable, Penaco capital
IDENTIFY CRITERIA IN PURCHASING
PRODUCTION MATERIALS

WHAT DO YOU ALREADY KNOW?

Directions: Let us find out how much
you already know in identifying
criteria in purchasing production
materials and utilizing
standard inventory control of the
production materials. Encircle the letter of
your best answer.

[Link], cucumber, carrots, tomatoes and corn are examples of

what products?
a. grown products
b. manufactured products
c. processed products

2. The dresses we have, bags we use and shoes we wear, are

examples of what products?
a. grown products
b. manufactured products
c. processed products

3. The maximized use of the natural resources, nurturing

entrepreneurial skills of the Filipino people and additional
income of the government through tax collection are examples
of what purchasing activity?
a. benefits of purchasing activity
b. factors in purchasing goods and services
c. guidelines in purchasing process

4. Assessing the profile of the producers and customers and

checking the track record of the suppliers are examples of what
purchasing activity?
42
a. benefits of purchasing activity
b. factors in purchasing goods and services
c. guidelines in purchasing process

5. These are stock files of materials for the inputs of production.

a. finished-goods-inventory
b. raw-materials-inventory
c. work-in-process inventory

6. These are partially completed products requiring further

processing including sets of unfinished goods for production
process.
a. finished-goods-inventory
b. raw-materials-inventory
c. work-in-process inventory

7. These are the final outputs of production ready for delivery to

the customers.
a. finished-goods-inventory
b. raw-materials-inventory
c. work-in-process inventory

[Link] card #1 has information and data that are categorized

in what cluster of items?
a. collective
b. group
c. individual

9. Stock card #2 has information and data that are categorized

in what cluster of items?
a. collective
b. group
c. individual

10. When you need to purchase or avail of goods and services

without the need to leave the country, how do you classify
these resources?
a. export resources
b. imported resources
c. local resources

43
 LESSON 4
IDENTIFY CRITERIA IN PURCHASING
PRODUCTION MATERIALS

WHAT IS THIS LESSON ABOUT?

This lesson will teach you how to identify criteria in
the purchase of production materials. It will guide
you on how to utilize a stock card for inventory
control of production materials necessary in the
continuous operation of the business.

WHAT WILL YOU LEARN?

At the end of the lesson, you are expected to:
1. learn the benefits and factors in purchasing goods
and services by using the set of criteria cited in this
lesson;
2. use a stock card for the inventory control of the
production materials; and
3. identify local sources necessary in the purchase of
production of materials.

I. PURCHASING OF GOODS AND SERVICES FROM

THE LOCAL SOURCES

PRODUCTS – anything that can be offered to a market that

might satisfy your want or your need.

CLASSIFICATION OF PRODUCT
1. Grown Products – fruits, plants and vegetables and other
natural resources
2. Manufactured Products – products that are produced
according to the needs and wants.
3. Services – intangible products

BENEFITS OF PURCHASING LOCAL GOODS AND SERVICES

44
A. It stops the value of colonial mentality.
B. It gives additional income to the government through tax
collection.
C. It maximizes the use of our natural resources from raw
materials to the finished products.
D. It develops the skills to the Filipino people making them more
innovative, creative, and productive.
E. It gives affordable price for seasonal and quality products,
fruits and vegetables.

FACTORS TO CONSIDER WHEN PURCHASING GOODS AND

SERVICES
A. Study the profile of local producers.
B. Research on the daily average consumption of the
customers.
C. Know your customers.
D. Find out the right place to buy.
E. Determine how much to procure.
F. Check the track record of each supplier.
G. Get the behavior of the patrons towards products and
services.
H. Ensure the sustainability of the items.

II. UTILIZE STANDARD INVENTORY CONTROL OF

THE PRODUCTION MATERIAL

LET US STUDY

INVENTORIES – are stocks of goods and materials

available for productions or manufacturing.
STOCKS – inventory itself in various forms
CONTROL – is an approach or strategy that checks,
and balance resources needed in the continuous
operation of the business.
STOCK CARD – good strategy to control records of
goods and materials.

TYPES OF INVENTORIES
1. RAW - MATERIALS INVENTORY (RMI) – these are stockpile of
materials for inputs of production.
2. WORK – IN – PROCESS INVENTORY (WIPI) – these are partially
completed products requiring further processing including sets
of unfinished goods for production process.
45
3. FINISHED – GOODS INVENTORY – these are the final outputs
of production ready for delivery to the market or customers.

STOCK CARDS
1. STOCK CARD – 1 – is for itemized inventory record per item or
individual
2. STOCK CARD – 2 – is for collective inventory record of all files
of stock card – 1

TENEZA'S MEAT & FISH PRODUCT COMPANY

Stock Card - 2
(Collective Items from Stock card -1)
Operation Year: _______________
Mont Ite Beginning Total Deliveries Cumulative
h m Balance Balance

Total
Withdrawals

TENEZA'S MEAT & FISH PRODUCT COMPANY

Stock Card - 1
(Individual/Per Item)
Stock Card 1 Min. Stock: 3 bags Supplier: MVC Company
Item: TVP / Textured
Vegetable Protein Max. Stock: 25 bags Re-Order Stock: 20 bags
Date Deliveries Withdrawals BALANCE Withdrawn by: (Person /
(qty/units) (qty/units) (qty/units) Department)
Balance Forwarded 20 bags Ms. Sol Saldivar
2009
MAY
25 5 bags 15 Mr. Rene Delfino
26 8 7 Jun (Mixing Section)
27 4 3 Reynaldo (Receiving Sec)
28 20 bags (OR# 1221, P750/bag) 23 Leony (MVC Co.)
29 5 18 Perchy (DepEd)

III. A. ESTIMATE COST OF PRODUCTS AND SERVICES

TOTAL REVENUE = TR TOTAL COST = TC

RULES OF PRODUCTION:
1. TR = TC
DECISION: There is a need to maintain your production.
2. TR < TC

46
DECISION: The production needs to stop.
3. TR > TC
DECISION: You have to produce more.

III. B. COMPUTING THE COST OF THE PRODUCTS OR

SERVICES
 Use ESTIMATE APPROACH

BENEFITS OF COSTING
1. You can draft your estimates without worries.
2. You can anticipate for estimated profits.
3. You can identify the expensive and cheap materials you
need.
4. You can have a chance to do cost-cutting.
5. You can sense the improvements of your business.
STEPS IN COMPUTING THE COST
1. List down your needed raw materials.
2. Determine the other raw materials you need in operation of
your business and services.
3. Specify your estimate for needed manpower.
4. Come up with the facilities and machineries required in the
operation of your chosen business.
5. Survey on the quality but cheapest source materials you
need.
TYPES OF COST
1. DIRECT COST – refers to the items which becomes part of the
products or services composing material cost, wages and
benefits.
2. INDIRECT COST – refers to the items needed in running a
business and better known as overhead expenses. e.g. building
and machinery maintenance, salaries, office cost, selling cost
and financial cost.

DIRECT COST COMPUTATION

Description Estimated Cost
Monthly wage and allowance for 4 4 workers x P5,000 =
workers receiving P5,000 and 1 P20,000
supervisory receiving P10,000 1 supervisor =
P10,000

P30,000
Yearly wage and allowance for 4 P30,000 x 12 = P360,000
workers and 1 supervisor
Calculation for total number of hours 47 weeks x 40 hours/week
spent by workers per year x 4 = 7,520 hours
Hourly Labor Cost = Total Yearly Wage P360,000/7,520 =
47
Bill/total number of hours worked per P47.87/hour
year
Hours needed to complete a wood
bench (takes only 2 workers, each 4 hours x 2 = 8 hours
consuming 4 hours to do it).
Labor time taken x no. of workers =
total no. of hours
Direct Labor Cost of the wood bench:8 hrs x P47.87/hr =
No. of hours X hourly labor rate = total
P382.96
labor cost per wood bench Considered P380
BILL OF MATERIALS OF 1 WOODEN BENCH
QUANTIT DESCRIPTIO TOTAL PRICE / UNIT TOTAL
BOARD
Y N FEET BDFT COST COST
(bdft)
1 PC 2’x2’x8’ 3 P29 P87 P87
(leg)
4 PCS 1’x3’x10’ 2.5 P72.50 P290
(frame)
1 PC 1.5’x2x6’ 1.5 P43.50 P43.50
(brace)
4 BTLS Plastic P120 P480
Varnish
½ KL 2’ finishing P50 P25
nails
1 BTL Wood glue P65 P65
4 PCS Sandpaper P15 P60
1 PC 2’ paint P49.50 P49.50
brush
DIRECT MATERIAL COST PER BENCH P1,10
0

 DIRECT LABOR + DIRECT MATERIAL = TOTAL DIRECT COST

 P380 + P1.100 = P1,480 PER BENCH

INDIRECT COST COMPUTATION

Interest on loan P10,000
Insurance of machines / stocks P5,000
Maintenance of machines P20,000
Power and electricity P24,000
Rent on building P25,000
Salaries/ Wages P60,000
Selling Cost P20,000
(transportation/representation)
Telephone P5,000
Total Indirect Cost P169,000
48
 Tax (20% =of P169,000) P33,800
TOTAL INDIRECT COST FOR P202,800
THE YEAR

Based on ESTIMATE APPROACH, let us say that the entrepreneur

targets for 1,500 wood benches per year.
TOTAL INDIRECT COST PER BENCH: P202,800/1,500 =
P135.20

TOTAL DIRECT COST + TOTAL INDIRECT COST = TOTAL

COST PER BENCH
P1480 + P135 = P1,615

IV. DETERMINE PRICING OF PRODUCTS AND SERVICES

USING PRICING MODEL

 PRICING STRATEGY – is part of the pricing system

wherein the government becomes alert against who are
abusing and making unreasonable prices.

PRICING STRATEGIES:
1. VALUE BASED PRICING – price increases when there are
evident results
2. POSTING – P9.99 instead of P10, P24.50 instead of P25
3. VALUE PACK – mixture of clustered products with varied
prices in one pack or bag
4. COST – PLUS – PRICING – METHOD – setting up rice targeting
specific profit.
5. HIGH PRICE APPROACH – aiming to set quality and status. It is
also called PRESTIGE STRATEGY
6. PENETRATION MARKET – monopoly
7. FREE TASTING – sampling approach
8. RESULT PAY SCHEME – trial method

49
 PRICING MODELS OF GOODS AND SERVICES:
1. Percentage Allocation 2. AVERAGE MARK – UP
Approach (PAA) APPROACH (AMA)

A. UNIT COST OF PRODUCT EXAMPLE: LAUNDRY SERVICE

(UCP) = TVE TSHIRT = P55 PRICE OF LAUNDRY SERVICE PER
KILO:
TARGET PROFIT IN PERCENT COST OF LAUNDRY: P20
(TPP) = 40% GENERAL MARK-UP = 60%
TARGET MARKET (TP) = 40%
COMPUTATION: UCP=TPP OPERATING EXPENSES (OE) =
= P55 = (40% x P55) 20%

B. VOLUME COST OF PRICE = COST OF LAUNDRY + TP

PRODUCT (VCP) + OE

TVE TSHIRT BY VOLUME = P20 + (40% OF

TARGET PROFIT (VTP) P20) + (20% OF P20)
PER DOZEN OF QUANTITY = P20+P8+P4
(Q); PRICE = P32
1-5 DOZENS =38%
6-10 DOZENS = 35% CONDITIONS:
11-15 DOZENS = 32% A. 100% SERVICE FEE OF
16 DOZENS ABOVE = 30% P32/kg LAUNDRY
B. 5% DISCOUNT FROM 5 –
COMPUTATION FOR 1-5 12 kg LAUNDRY
DOZENS (12 PCS X 5 C. 10% DISCOUNT FROM
DOZENS = 60 PCS) 13 kg and ABOVE
VCP = (UCP + VTP) IF: 5-10 kg = discount of
xQ 5%
= (P55 + (38% OF UNIT PRICE = (P32X10kg)
P55) X 60 = (P55 + – (5% of total cost)
P20.90) X 60 = P320 – (5% of P320)
= P75.90 X 60 = P320 - P16
VOLUME PRICE =P Volume price = P304 per
4,554 10 kg
UNIT PRICE = P75.90 Unit Price = P30.40 per
kg

LET US REMEMBER

50
  In the purchasing activity of the business, the supply of
goods and services are vital factors to consider. Supply
is the amount of something the customers can avail from
the producers who make or grow goods and services.
 In the successful inventory control management, always
remember to take note of the date, items received and
withdrawn, supplier sources, minimum and maximum
stocks, re-order stock, the price, and other data
important in the inventory control. The stock card should
always be maintained as a tool or basis to control
inventory.
 The rules of production are helpful to the entrepreneurs.
These will guide him to know what and how to decide on
his production. It tells when they need to produce more,
when to stop production or when to maintain the
production. Likewise, it is good for all the business
enterprises to know the computation of their production
to avoid failure of business operations.
 As a future entrepreneur, you must value the importance
of honest and accurate computation in pricing. Pricing
policy will help every entrepreneur. The use of models
or standard samples of computation will facilitate the
correct pricing procedure.

LET US APPLY WHAT YOU HAVE LEARNED

ACTIVITY:

4.1. Identify whether GROWN PRODUCT,

MANUFACTURED PRODUCT OR SERVICE.

___________________________1. TUTORIAL
___________________________2. CHICKEN
___________________________3. COCONUT HUSK
___________________________4. APPLE
___________________________5. BAGS
___________________________6. CONSULTANCY
___________________________7. CORN
___________________________8. MASSAGE
___________________________9. BOTTLE DISPENSER
___________________________10. NOTEBOOK

51
4.2. Identify whether BENEFIT or FACTOR of purchasing local
goods or services.

____________________1. Maximizes the uses of our natural

resources from raw materials.
____________________2. Know your customers.
____________________3. Find out the right place to buy.
____________________4. Stops the value of colonial mentality.
____________________5. Gives affordable price for seasonal and
quality products.
____________________6. Gives additional income to the
government.
____________________7. Study the profile of local producers.
____________________8. Get the behavior of the patrons towards
the products or services.
____________________9. Ensure the sustainability of the products.
____________________10. Gives additional income to the
government.

4.3. Identification.
____________________1. Is for itemized inventory record per item
or individual.
____________________2. Inventory itself in various forms.
____________________3. These are stockpile of materials for inputs
of production.
____________________4. Is for collective inventory record of all
files.
____________________5. These are the final outputs of production
ready for delivery to the market.
____________________6. Good strategy to control records of goods
and services.
____________________7. Is an approach or strategy that checks,
and balance resources needed in the continuous operation of
the business.
____________________8. These are partially completed products
requiring further processing including sets of unfinished goods
for production process.
____________________9. Are stocks of goods and materials
available for production or manufacturing.
____________________10. Number of stock cards.

52
4.4 Draw if there is a need to produce more, if
there is need to stop production, if there is need
to maintain the production.
NO. BUSINESS NAME TR TC DECISION
1 SON’S ACADEMY 18,000 21,000
2 SEA-BRICKS 24,500 19,000
CORPORATION
3 JAY’S FASHION SHOP 15,880 15,880
4 JR./SR. INTERNET 6,800 8,300
CAFÉ
5 CELJUN’S TRANSPO 22,100 15,500
4.5 Identify whether part of DIRECT COST or INDIRECT
COST for table.
__________________1. Laborers wage
__________________2. Power consumption
__________________3. Synthetic wood
__________________4. Factory insurance
__________________5. Wood
__________________6. Supervisor Salaries
__________________7. Factory depreciation
__________________8. Nails and screws
__________________9. Varnish and glue
__________________10. Glass
4.6 Computation.
1. If you have 2 workers receiving each a daily wage of P250 a
day with 5 working days a week, how much is your total wage
bill for a month?
2. Based on your answer in number 1, how much is your annual
wage cost of production?
3. How much will be your total direct cost per bench if total
direct labor is P200 and total direct material is 450?
4. If you have 10 jackets for P180 unit cost, how much will be
the unit price at 40% TARGET PROFIT in PERCENT (TPP)?
5. Compute how much will be the price of a bottle of perfume
when the cost is P250 with 38% TPP?
6. With 10% discount incentive, what will be the unit price of
10kg laundry if the service is P32 per kilo?
7. The direct labor and direct raw material costs are under
which type of production cost?
8. What is the effect in business when TR < TC?
9. What rule on production that refers to the situation when you
need to decide to produce more?
10. What rule on production when you decide to maintain your
production?
CONDUCT PRODUCT OR SERVICE TRIAL RUN
53
 WHAT DO YOU ALREADY KNOW?
Think of the necessary ideas for a Business
Trial Run Design (BUTRUD) for the given
products below based on the strategies like
price flexibility, advertisement and
promotions, target market and business
locations. Write down appropriate ideas for
these products.

PRE-TEST
Directions: Below is a Business Training Run Design
for product and service type of business. Choose at
least one from the given matrix and fill-up the
needed information. Assume a business name of
yours and design for your BUTRUD up to
Advertisement and Promotion Scheme.

Business Trial Run Design

(BUTRUD)
PRODUCTS/SERVICES
Business Name
Business Owner
Business Location
Target/Goals
Timetable
Price
Flexibility
Market/ Clients
Advertisement /
Promotions

54
 LESSON 5
I. CONDUCT A PRODUCT OR SERVICE TRIAL RUN

WHAT IS THIS LESSON ABOUT?

This lesson deals with the development of a Business
Trial Run Design (BUTRUD) based on the
viability of the business you may want to engage in.
You will also learn how to use the BUTRUD and run a
trial for your own product or service.

WHAT WILL YOU LEARN?

At the end of this lesson, you are expected to:
1. Come up with your own Business Trial Run
(BUTRUD) suited for your business whether
product or service type; and
2. Use your own BUTRUD in preparation of the
selling of your business.

LET US STUDY

Inputs – are the materials needed for processing

to come up with finished products.
Output – means finished product
Process – is the step – by – step procedure
followed in transforming materials into finished
products.
Production Plan – involves the necessary raw
materials and parts, number of workers, types of
machines needed, and the completion time for
such operation involved.
Projected Sales – are the expected results of
variable cost and fixed cost within the target
period.
Sales Management – involves formulation of sales
strategy.
Trial – Run Viability – is the actual testing of a
business.
means the practicability of the business.

55
 BUSINESS TRIAL RUN DESIGN (BUTRUD) FOR
PRODUCT and SERVICE TYPE OF BUSINESS

Before engaging into any actual business like selling a

product/ s which you are to manufacture or produce, the essential
thing to do first is to design a Business Trial Run Design (BUTRUD).
This will serve you as a guide on how to decide from time to time to
come up with a better business management be it manufacturing or
rendering services.

BUTRUD (BUSINESS TRIAL RUN DESIGN) – actual testing of

the business; serves as a tool to check and balance the
management of the business to ensure a good income.

EXAMPLE:
BUSINESS TRIAL RUN DESIGN (BUTRUD)
PRODUCT TYPE OF BUSINESS
BUSINESS NAME: POP IT! (POP CORN)
BUSINESS OWNER: JOVITO B. TENEZA
BUSINESS LOCATION: CONSOLACION NATIONAL HIGH
SCHOOL
TARGET GOALS:  TO EARN INCOME OF 1,500 A
WEEK
 TO DOUBLE THE INCOME
FOR THE SUCCEEDING
WEEKS AFTER THE TRIAL
RUN
 TO HAVE AN UPWARD SALES
FROM ONE WEEK ONWARDS
 TO SAVE AT LEAST 25% OF
THE DAILY INCOME FOR
REVOLVING FUND AFTER
TRIAL RUN
TIMETABLE: ONE WEEK ONLY
PRICE FLEXIBILITY: MINIMUM PRICE: P10.00/pack
MAXIMUM: P15.00/pack
ADVERTISEMENT/PROMOTION: FREE POP IT! KEY CHAIN FOR EVERY 8
PACKS OF SMALL PACKAGE OR
4PACKS OF BIG PACKAGES.
TARGET MARKET:  COMMUNITY
NEIGHBORHOOD
(CHILDREN)
 STUDENTS AT NEARBY.
ELEMENTARY, HIGH
SCHOOL, COLLEGES AND
UNIVERSITIES, WALKERS ON
THE SIDEWALKS
 BUYERS / WALKERS IN THE
MARKETS/SUPERMARKETS

LET US REMEMBER
56
 In venturing a business, it is important that the
enterprise owner is well versed with the Business Trial Run
Design (BUTRUD). This would help him to improve the business
operations that may result for better products or services. The
BUTRUD serves as a tool to check and balance the management
of one business to ensure a good income.

LET US APPLY WHAT YOU HAVE LEARNED

ACTIVITY:

5.1. Try to arrange the words from the Item Bank.

Put 1 as the first and 10 as the last part of BUTRUD.

ITEM BANK
Business Name Service type of business
Product type of business Price Flexibility
Business Location Advertisement/Promotion
Timetable Target Goals
Market Clients Business Owner

5.2 Items on the first column of the chart below describe

some part of the structure of a Business Trial Run Design
introduced to you in this lesson. Analyze what is being
described and write your answer on the column opposite
of each item.

CONTENT PART OF THE BUTRUD

1. Buy free for the 1st 5 clients
2. One-week trial run
3. To save 10% from income after
a week of trial run

4. Students from elementary,

high school and universities

5. Fruit-Veg Ice Cream for All

Seasons

II. ACTUAL SELLING OF PRODUCT OR SERVICE

57
 WHAT IS THIS LESSON ABOUT?
This lesson deals with the actual selling and
application of sales management strategies to your
business.

WHAT WILL YOU LEARN?

At the end of this lesson you should be able to:
[Link] the actual selling of your enterprise be it a
product or a service.
[Link] sales management strategies.

LET US STUDY

KEY TERMS:
1. SELLING – is the last step in the chain of commerce
where buyers’ exchanges cash for a seller’s goods or
services.
2. PERSONAL SELLING – is a seller’s attempt to
persuade a buyer to make a purchase.
3. SELLING TERMS – is the length of time a seller
allows a buyer to pay the goods or services sold on
credit.
4. PRICE VALUE – is the market value or agreed
exchange that will purchase a definite quantity, weight
or other measure of goods or service.
5. SELLING TECHNIQUES – is the process of
approaching prospective customers or clients who were
not expecting such an interaction.

Most successful entrepreneurs believe that there are

ideal techniques in actual selling.

SELLING STRATEGIES:
1. COLD CALLING – is the process of approaching prospective
customers or clients who were not expecting such an
interaction.

58
2. CONSULTATIVE SELLING – emphasizes customer’s need
and meeting those needs with solutions combining products or
services.
3. DIRECT SELLING – face to face presentation, demonstration
and sale of products or services, usually at home or office of a
prospect by the independent’s direct seller.
4. PERSUASIVE SELLING – it calls for the ability of the seller
to persuade his buyer according to the compelling reasons why
the buyers need to buy your enterprise.

STEPS YOU MAY FOLLOW IN SELLING:

1. PROSPECTING – you can get prospects from a number of
sources such as REFERRAL which means you can get customer
through existing customers.
2. SALES PRESENTATION – presenting your product or service
to your customers.
Four Types of Sales Presentation:
a. STIMULUS – RESPONSE – where you try to offer necessary
information (stimulus) at the right time to make your clients
(response).
b. FORMULA SELLING – more thorough in providing your
product information. It reduces the risk of losing important
information.
c. CANNED PRESENTATION – presenting what you have
memorized or just doing it by reading.
d. NEED PRESENTATION – involves asking and listening to
customers to identify their needs and desires.
3. HANDLING QUESTIONS – usually prospects are objecting
based on the costs, benefits or both. Patience is a virtue on this
matter.
4. CLOSING – secure their commitments to purchase.
5. BUILD LONG-TERM RELATIONSHIP – it involves follow-up
sales to see to it that they are satisfied with your enterprise.

LET US REMEMBER
Selling is believed to be an art of persuasion. There are
suggested steps where you can go through to sell your product
or service successfully.

59
 5.3 SELLING ACTIVITY
PRODUCT NAME: ____________________________________
INDIVIDUAL/GROUP NAME: ________________________
DATE: ____________________

DAY 1
Name of No. of Original Total
Product Product Price of the Capital
To be sold Product (axb)
a b

INVENTORY:
Name of No. of Price per Total Sales
Product Product Product (axb)
Sold b
a

PROFIT: total sales – total capital

NAME OF TOTAL TOTAL PROFIT
PRODUCT SALES CAPITAL

NAME OF WORK FOR THE SHARE / PAY

MEMBERS DAY

60
 HOW MUCH HAVE YOU LEARNED?
POST TEST
1. What is expanded definition of BUTRUD?
a. Business Type Run Design c. Business Understanding Trial Run Design
b. Business Trial Run Design d. Business Understanding Type Run Design
2. What is the last step in the chain of commerce where buyers exchange cash for a seller’s goods or
services?
a. buying b. purchasing c. manufacturing d. selling
3. Which of the following term is a seller’s attempt to persuade a buyer to make a purchase?
a. consultative selling b. direct selling c. persuasive selling d. personal selling
4. What do you call the market value or the agreed exchange price?
a. price value b. market value c. book value d. par value
5. Which selling strategies is the process of approaching prospective customers who were not
expecting such an interaction?
a. cold calling b. consultative selling c. persuasive selling d. direct selling
6. Which selling strategies that emphasize customer’s needs and meeting those needs with solutions?
a. cold calling b. consultative selling c. persuasive selling d. direct selling
7. Which selling strategies that focuses on face to face presentation, demonstration and sale of
products?
a. cold calling b. consultative selling c. persuasive selling d. direct selling
8. Which strategies that calls for the ability of the seller to persuade his buyer according to his
reasons?
a. cold calling b. consultative selling c. persuasive selling d. direct selling
9. What is the first step to follow in selling?
a. Prospecting b. Sales Presentation c. Handling Questions d. Closing
10. Which step in selling when presenting your product or service to your customer?
a. Prospecting b. Sales Presentation c. Handling Questions d. Closing
11. After handling questions, what is the next step to secure commitment of the buyer to purchase?
a. Prospecting b. Sales Presentation c. Handling Questions d. Closing
12. What is the last step to follow in selling?
a. Prospecting b. Sales Presentation c. Build Long term Relationship d. Handling
Questions
13. After prospecting possible customers, what is the next step in selling?
a. Prospecting b. Sales Presentation c. Build Long term Relationship d. Handling
Questions
14. What sales presentation when you try to offer necessary information at the right time to make
your clients?
a. Formula Selling b. Canned Presentation c. Need Presentation d.
Stimulus-Response
15. What sales presentation where it involves asking and listening to customers to identify their
needs and desire?
a. Formula Selling b. Canned Presentation c. Need Presentation d.
Stimulus-Response
16. What sales presentation where it involves presenting what you have memorized or just doing it
by reading?
a. Formula Selling b. Canned Presentation c. Need Presentation d. Stimulus-Response
17. What sales presentation where it involves presenting thorough information about your product?
a. Formula Selling b. Canned Presentation c. Need Presentation d.
Stimulus-Response
18. What serves as a tool to check and balance the management of one business to ensure a good
income?
a. Selling b. BUTRUD c. Selling Strategies d. Selling Techniques

61
19. Which of the following is not part of selling strategies?
a. prospecting b. direct selling c. cold calling d. persuasive selling
20. In handling questions in selling, what characteristics do you need to have?
a. pessimistic b. patience c. reliable d. annoying
LESSON 6
MONITOR AND EVALUATE BUSINESS OPERATIONS

WHAT IS THIS LESSON ABOUT?

This lesson focuses on monitoring and
evaluating business operations. You will be
guided on how to use tools and methods for
supervising/monitoring and evaluating
business operations. When you are already
familiar with the tools and methods, the last
part of your lesson will be on reporting results
of monitoring and evaluation you conducted.

WHAT WILL YOU LEARN?

At the end of this module, you are expected to:
1. identify the different tools used in monitoring and
evaluating business operations;
2. apply methods in monitoring and evaluating
business operations;
3. prepare written and oral report based on the
results of the monitoring and evaluation conducted.

LET US STUDY

Accountability is the obligation of an individual, firm,

or institution account for its activities, accept
responsibility for them and to disclose the results in a
transparent manner.
Accounting is a systematic process of identifying,
recording, measuring, classifying, verifying,
summarizing, interpreting and communicating financial
information
Asset is something valuable that an enterprise owns,
benefits from, or has use of, in generating income.
Budget is the estimate of costs, revenues, and
resources over a specified period, reflecting a
management's reading of future financial conditions.
Business operations consists of handling money and
recording day to – day transactions, computations,
buying of materials and supplies, and checking of
facilities
Equity is the right to an
62 asset or property, held by a
creditor or a business owner.
Evaluation deals with measuring business operations
variable based on identified criteria.
Liability are the accounts and wages payable, accrued
rent and taxes, trade debt, and short and long-term
loans. Owners' equity also is termed a liability because
it is an obligation of the firm to its owners.
Procurement is a complete process of obtaining goods
and services from preparation and processing of a
requisition to receipt and approval of the invoice for
payment.
Finance deals with matters related to money and the
markets. Monitoring is supervising activities in progress
to ensure they are on-course and on-schedule in
meeting the objectives performance targets.

Common Tools for Monitoring and Supervising Business

Operations

Used to:
Tools
Identify Describe Analyze

market share,
1. Bar Graph product
performance, sales, buying
comparing sales patterns

2. Benchmarking market
position market share
3. Checklist customer
preferences

Different
4. Program Matrix business Progress or Targets, goal
activities accomplishments attainment
quality of
7. Indicator Matrix product/ serv63product/ service
ice performance
 HOW MUCH HAVE YOU LEARNED?
POST TEST
DIRECTION: To assess how much you learned from the
previous lesson try to answer the questions below. This
will help you recall the things you learned about
business planning and preparing financial records in
business operations.

1. In any business, which of the following statements applies to

purchase and sales receipts?
a. Purchase receipts show what you have ordered from others
while sales receipts show the value of goods received from
others.
b. Purchase receipts show what you have purchased form
others and sales receipts show what others have purchased
from you.
c. Purchase receipts show the items that others have purchased
from you and sales receipts show what you have purchased
from others.
d. Purchase receipts show what others have ordered from you
and sales receipts show the value of the goods you purchased
from others.
2. Which of the following statements best explains the most
important reason why businesses use checking accounts?
a. to gain tremendous prestige for entrepreneurs
b. to secure interest on the balance in the account
c. to provide a good record of payments
d. to enhance the quality of correspondence
3. Choose one of the following statements to indicate how the
inventory card is related to the purchase receipt and the sales
receipt.
a. Many of the purchase receipts would involve adding
inventory; sales receipts would be subtractions from inventory.
b. Many of the purchase receipts would involve subtracting from
inventory; sales receipts would be additions to inventory.
c. Both the purchase and sales receipts would involve adding to
inventory because they represent the same transaction.
d. Both the purchase and sales receipts would involve
subtracting from inventory because they represent the same
transaction.

64
4. The difference between the accounts receivable and accounts
payable cards can best be explained by which of the following
statements.
a. Accounts receivable show your cash sales, while accounts
payable show which customer owes you money.
b. Accounts receivable show your credit sales, while accounts
payable show which customer owes you money.
c. Accounts receivable show the customers who owe you
money, and the accounts payable show the vendors to whom
you owe money.
d. Accounts receivable show the vendors who owe you money,
and the accounts payable show the customers who owe you
money.
5. According to the cash method, what do you need to
determine the amount of profit for a particular period?
a. accounts receivable card and the check book deposits and
checks.
b. accounts payable card and inventory record.
c. deposits, revenue, checks written for expenses and service
charges.
d. inventory record and checkbook deposits.
6. One of the best ways to determine whether you have made a
good profit is to:
a. set a goal at the beginning of the year and compare your
profit to that goal.
b. compare your rate of return on the business to the return
which could be gained by using your resources in alternative
ways.
c. compare your profit to the 15% benchmark. If your return is
over that amount, you are doing well.
d. compare your return from your business against your savings
at a local bank.
7. Businesses that only sell services do not maintain inventory
records because:
a. tracking the movements of items would be necessary.
b. there is no goods to track
c. inventory records are time consuming for services.
d. only one inventory record is needed.
8. In a business, two items that you must withhold from their
wages or salaries are: (Choose two letters.)
65
a. Income Tax c. hospitalization
b. SSS or GSISd. scholarship
9. Which of the following activities is the best example of a
controlling function of management?
a. deciding the amount/type of supplies to be ordered
b. telling employees about their specific responsibilities
c. putting in a timeclock for employees.
d. writing checks to make payments.
10. Prices are determined by:
a. cost of production and market demand
b. banks, as part of loan agreements
c. city regulations; laws and business
d. the Central Bank of the Philippines
11. Indicate an example of a typical fixed cost.
a. cost of supplies to make an item c. profit
b. rent d. mailing cost of items sold.
12. There are a number of factors to consider when relating to
your customers. Which of the following is it?
a. informing your customer of returns of your merchandise.
b. knowing your product/service
c. telling customers whatever it takes to make them feel good.
d. trying to provide all products that your customer may want.
13. Which of the following types of financial information would a
potential investor wants to see in a business plan?
a. start-up cost c. break-even point
b. projected revenue d. all of the above
14. In SWOT analysis, there are forces such as inflation and
unemployment rates, which are to be considered as external
environment where opportunities and threats abound. Which
one
is it?
a. economic forces c. political forces
b. societal forces d. technological forces
15. An essential analytical tool for business which compares the
Total Revenue and the Total cost is
a. Break – Even Graph c. Break – Even Analysis
b. Break –Even Point d. Break – Even Point Sales Volume

66