Exercise 6

Bagcal, Aldrin S.
Obligado, Rico
Capiral, Calixto

Step 1 Plant Information

Name Product A Processing Plant
Initial Capital ₱3,425,770.95
Number of Partners 5
Name of Partners Galo, Capital
Caliboso, Capital
Benito, Capital
Rosario, Capital
Tabago, Capital

Step 2 Selling Price

Manufacturing Cost ₱101.96
Mark up 20%
Selling price ₱122.35
 Direct Material
Direct Material Cost per Unit Cost per Unit -
Item Price Quantity Unit Cost This table
indicates the
BANANA (kg) ₱80.00 50 ₱4,000.00 materials used for
the production
Brown sugar (kg) ₱47.00 2 ₱94.00 which are
traceable to the
Honey (bottle) ₱200.00 1 ₱200.00 main product

Cooking oil (Liter) ₱75.00 5 ₱375.00

Total ₱4,669.00 *for 100 packs

₱93.38 *for 1 pack

Direct Labor Cost per

Direct Labor Cost per Unit Unit - Refers to the
No. of salaries of laborers
Workers Daily Rate Working Labor Cost engaged directly in the
days production process
Operator x 1 ₱500.00 22 ₱11,000.00
Semi-skilled labour for processing
x4 ₱500.00 22 ₱44,000.00
Semi-skilled labour for packaging x
3 ₱500.00 22 ₱33,000.00

Total ₱88,000.00

*Production per month (100 grams banana chips) 100000

Direct Labor Cost per Unit ₱0.88

 Manufacturing Overhead Cost
Indirect Material Cost-
(a) Indirect Material Cost Put the materials used
Quantity but is not an integral
Item Price Unit cost
per sale part of the product (e.g.
packaging materials,
Polyethylene Plastic Bags (pcs) ₱3.00 1 ₱3.00
PPE, cleaning supplies,
Label design ₱1.00 1 ₱1.00 etc.)

Total indirect material costs ₱4.00

Indirect labor cost -

(b) Indirect Labor Cost per Unit Refers to the
manufacturing
Workers Salary per month employees who are
classified as direct
labor. (e.g.setup or
Plant supervisor ₱25,248.00 clean up workers,
material handlers,
Marketing Executive ₱23,822.00
mechanics)
Total ₱49,070.00

*Production per month (100 grams banana chips) 100000

Indirect Labor Cost per Unit ₱0.49

(c) Overhead Overhead - Expenses

 that are not directly
Items Cost/month
tied to production
(e.g. accounting fees,
Electric Bill ₱319,583.33 insurance, legal fees,
rent, etc.)
Water Bill ₱551.15

Communication ₱999.00

Total ₱321,133.48

*Production per month (100 grams banana chips) 100000

Overhead Cost per Unit ₱3.21

Manufacturing Cost per Unit

Direct Material Cost ₱93.38

Direct Labor Cost ₱0.88

Manufacturing Overhead cost per
unit ₱7.70

Manufacturing Cost per Unit ₱101.96

Step 3 Production Equipment

Item Quantity Cost Total Cost
Tray Dryer - Volt: 230, watt 6kw; motor 3HP;
model: Horizontal air flow; capacity 1 ₱67,000.00 ₱67,000.00
15kg; Temp range 200oC
Deep fat fryer -Temp range 300oC 6lit; single phase;
1 ₱10,050.00 ₱10,050.00
2kW
Mechanical
1 ₱33,500.00 ₱33,500.00
Slicer - 11 blades, 0.5 hp
 Peeling and
15 ₱3,350.00 ₱50,250.00
slicing knives
Sealing
machine-pedal
operated - Impulse sealing-for sealing of LDPE/ 2 ₱3,350.00 ₱6,700.00
H D PE/ Nylon / L a min a t e s-pe da l
operated
Office Equipment
Item Quantity Cost Total Cost
Office Equipment: Airconditioner 1 ₱15,000.00 ₱15,000.00

Office Equipment: Desktop Computer 2 ₱12,000.00 ₱24,000.00

Furniture and Fixtures
Item Quantity Cost Total Cost
Table 5 ₱3,000.00 ₱15,000.00
Chairs 5 ₱300.00 ₱1,500.00
Total ₱223,000.00

Step 4 Salaries Expenses

Aprox. No. of
Workers Daily Rate Monthly Rate
Service days
Operator ₱537.00 22 ₱11,814.00
Semi-skilled labour for processing No. 1 ₱537.00 22 ₱11,814.00
Semi-skilled labour for processing No. 2 ₱537.00 22 ₱11,814.00
Semi-skilled labour for processing No. 3 ₱537.00 22 ₱11,814.00
Semi-skilled labour for processing No. 4 ₱537.00 22 ₱11,814.00
Semi-skilled labour for packaging No. 1 ₱537.00 22 ₱11,814.00
Semi-skilled labour for packaging No. 2 ₱537.00 22 ₱11,814.00
 Semi-skilled labour for packaging No. 3 ₱537.00 22 ₱11,814.00
Plant supervisor ₱1,147.64 22 ₱25,248.00
Marketing Executive ₱1,082.82 22 ₱23,822.00
Total Salaries Expense ₱143,582.00

Step 5 Taxes and Licenses

Renewal Cost
Renewal Terms Cost Amount
(%)
Quarterly ₱17,829.00 0.02 ₱356.58
Semi-Annual ₱17,829.00 0.03 ₱534.87
Annual ₱17,829.00 0.01 ₱178.29
Total ₱1,069.74

Step 6 Utilities
Expenses Amount
Electric Bill ₱319,583.33
Water Bill ₱551.15
Communication ₱1,200.00
Total ₱321,334.48

Cost of the Project and Means of Financing

Item Amount Life in years Depreciation per year

25,
Land & Building 1,291,337.23 50 826.74

Machine/Equipment & Furnitures/Fixtures 223,000.00 20 11,150.00

Pre-operating Cost 500,000.00

Pre-operating marketing 100,000.00

Initial working capital 1,000,000.00

Total 3,114,337.23

Contingencies @10% 311,433.72

Total Project Cost 3,425,770.95

Financing Options

1. Personal - comes from the budget of the company itself or the owner

2. Debt Financing - this may come from bank loans, bond financing, or export credit agencies
3. Equity Financing - The issue of new shares in exchange for a monetary investment. Your company
receives the funds it requires, and the investor becomes a shareholder.

Projected Profitability
Particulars 2023 2024 2025 2026 2027
146,825,330. 161,507,863.1 177,658,649. 195,424,514.4 214,966,965.8
Sales Realization (10%)
16 8 49 4 9
Cost of Production (increases 10% per year)

141,395,760.0
Raw and Packing Material 116,856,000.00 128,541,600.00 0 155,535,336.00 171,088,869.60

Utilities 3,856,013.80 4,241,615.18 4,665,776.70 5,132,354.37 5,645,589.80

Salaries 1,722,984.00 1,895,282.40 2,084,810.64 2,293,291.70 2,522,620.87

Stores and spares 440,475.99 484,523.59 532,975.95 532,975.95 586,273.54

Repair and maintenance @ 2.5% 3,670,633.25 4,037,696.58 4,441,466.24 4,885,612.86 5,374,174.15

Selling and distribution expenses @ 10% 14,682,533.02 16,150,786.32 17,765,864.95 19,542,451.44 21,496,696.59

Administrative expenses 516,895.20 568,584.72 625,443.19 687,987.51 756,786.26

171,512,097.6
Total 141,745,535.26 155,920,088.79 7 188,610,009.84 207,471,010.82

Profit before Interest and Depreciation 5,079,794.90 5,587,774.39 6,146,551.83 6,814,504.61 7,495,955.07

Bank loan payment (i=5%) ₱775,782.29 775,782.29 775,782.29 775,782.29 775,782.29

Depreciation 11,049.50 11,049.50 11,049.50 11,049.50 11,049.50

Net Profit 4,292,963.11 4,800,942.60 5,359,720.04 6,027,672.82 6,709,123.28

Income Tax @ 30% 1,287,888.93 1,440,282.78 1,607,916.01 1,808,301.85 2,012,736.98

 Profit after Tax 3,005,074.18 3,360,659.82 3,751,804.03 4,219,370.97 4,696,386.29

Caliboso,
Galo, Capital Capital Benito, Capital Rosario, Capital Tabago, Capital
489,395 489,395. 489,395 489,395 489,395
Initial Contribution .85 85 .85 .85 .85
Additional investment 0 0 0 0 0
613,280 613,280. 613,280 613,280 613,280
Share in Net Income .44 44 .44 .44 .44
Share in Net Loss 0 0 0 0 0
1,102,676 1,102,676. 1,102,676. 1,102,676. 1,102,676.
Total Partner's Equity .29 29 29 29 29

Cash Flow Statements Balance Sheet

2023 2024 2023
Cash receipts Asset

Capital Contribution 3,105,300.00 Current Asset

Sales Realization 146,825,330.16 Cash 6,456,094.90

Total Cash Receipt 149,930,630.16 Total Current Assets 6,456,094.90

Cash Payments Non-Current Assets

Land & Building Land & Building
 1,500,000.00 1,291,337.23
Machine/
223,000.0 220,990.
Machine/Equipment & Furnitures/Fixtures Equipment&Furnitures/
0 00
Fixtures

Cost of Production 141,745,535.26 Total 1,512,327.23

Pre-operating Cost 5,000.00 Accumulated Depreciation 11,049.50

Pre-operating marketing 1,000.00 Total non-current assents 1,501,277.73

Total Cash Payments 143,474,535.26 Total Assets 7,957,372.63

Net Cash Flow 6,456,094.90

6,456,0
Beginning Cash Balance 0 94.90

Cash Balance 6,456,094.90

Cost of the Project and Means of Financing

Deprecia
tion per
Item Amount Life in years year

Land & Building 1,500,000.00 50 30,000.00

Machine/Equipment & Furnitures/Fixtures 223,000.00 20 11,150.00

Pre-operating Cost 500,000.00

Pre-operating marketing 100,000.00
Initial working capital
500,000.00
Total
2,823,000.00
Contingencies @10%
282,300.00
Total Project Cost
3,105,300.00

Financing Options
1. Personal - comes from the budget of the company itself or the owner
2. Debt Financing - this may come from bank loans, bond financing, or export credit agencies
3. Equity Financing - The issue of new shares in exchange for a monetary investment. Your company receives
the funds it requires, and the investor becomes a shareholder.

Projected Profitability
Particulars 2022 2023 2024 2025 2026
Sales Realization 146,825,330 161,507,863 177,658,649 195,424,514
214,966,965.89
(10%) .16 .18 .49 .44

Cost of Production
(increases 10% per
year)

Raw and Packing 116,856,000. 128,541,600. 141,395,760. 155,535,336.

Material 00 00 00 00 171,088,869.60

Utilities 3,856,013.80 4,241,615.18 4,665,776.70 5,132,354.37 5,645,589.80

 Salaries 1,722,984.00 1,895,282.40 2,084,810.64 2,293,291.70 2,522,620.87

Stores and spares 440,475.99 484,523.59 532,975.95 532,975.95 586,273.54

Repair and
maintenance @ 2.5% 3,670,633.25 4,037,696.58 4,441,466.24 4,885,612.86 5,374,174.15
Selling and
distribution expenses 14,682,533.0 16,150,786.3 17,765,864.9 19,542,451.4
@ 10% 2 2 5 4 21,496,696.59
Administrative
expenses 516,895.20 568,584.72 625,443.19 687,987.51 756,786.26

141,745,535. 155,920,088. 171,512,097. 188,610,009.

Total 26 79 67 84 207,471,010.82

Caliboso,
Galo, Capital Capital Benito, Capital Rosario, Capital Tabago, Capital
443,614 443,614. 443,614 443,614 443,614
Initial Contribution .29 29 .29 .29 .29
Additional investment 0 0 0 0 0
638,392 638,392. 638,392 638,392 638,392
Share in Net Income .20 20 .20 .20 .20
Share in Net Loss 0 0 0 0 0
1,082,006 1,082,006. 1,082,006. 1,082,006. 1,082,006.
Total Partner's Equity .49 49 49 49 49