A.

Financial Assumptions

A. 1 Operating Assumption

A. 1.1 Sales

A. 1.1.1 Selling Prices

The selling price will be set below the market price since the company transacts primarily with
retailers. Sales will be recorded using cash basis.

* Selling price will set below market price because the company was primarily transacting in a business to business transaction.
(Need ng iinterviewhin about setting prices)

* In recording sales, cash sales will be used.

* The increased sales in the month of April May and December which is 50% to 200% was based on the interviewed retailers.

* The increased of sales per year will be based on the growth rate of 8 to 10 % for the succeeding years which is based on the
data presented by International Food Exhibition (IFEX) Philippines 2018.

A. 2 Production

 GG Norte will utilize the perpetual inventory system in accounting its merchandise inventories.

* Perpetual inventory system as accounting

* Full absorption costing will be used in computing cost of goods sold and First in First out will be used in cost flow assumption

* The increased production in the month of April May and December which is 50% to 200% was based on the interviewed
retailers

* The increased of production per year will be based on the growth rate of 8 to 10 % for the succeeding years which is based on
the data presented by International Food Exhibition (IFEX) Philippines 2018.

* Purchases will be cash basis. All ingredients and the smoked roundscad will be purchase a day before the production while the
bottles, label and seals will be ordered in bulk covering the one-month production every 1st week of the month.

 Composition of cost of product

 Direct Materials

 Direct Labor

This includes wages of the production staff which is Php 35.00 per kilogram of smoked
roundscad and monthly salary of Operation Manager.

 Manufacturing Overhead
A.3 Expenses

A 3.1 Marketing

A 3.2 Administrative

Marketing expense

* Pre-Operating Expense

* Operating Expense

Delivery Expense

Depreciation Expense

Income Tax Expense

Salary Expense

* Administrative Expense

Supplies Expense

all purchase supplies will be expense immediately and subject to inventory count every year end.

Office Equipment – Depreciation Expense

Others depreciation

Salary Expense

Investing Assumption

Financing Assumption

* Long term liabilities

* Equity

Capital contribution of each partner will contribute Php 100000 which total to Php 100000.

Profit and loss will be share equally by the partners after the deduction of salary allowance
amounting to Php 10000 of General, Operations, Marketing.

Each partner will withdraw 10% or 70% in total every year.