VII.

Financial Feasibility

A. Operating Assumptions

A. 1 Sales

According to the survey conducted by the proponents, the average demand for smoked

bottled roundscad is around 0000 bottles per week. In addition, according to retailers of bottled

fish products in Pangasinan, the demand peaks during May to June and December. The

demand is brought about by more customers willing to buy the product as pasalubong product,

gift item or for personal consumption during Festival season and Christmas season. Commented [u1]: Maganda sana kung malalagay ditto yung
demand ng retailers para sa year 1 tas yung variant at quantity na
io-order nila. Kunyare TGIR Restaurant 15 bottles each ng lahat ng
variants ganern. Di ko mahanap yung demand schedule natin based
sa survey sag c
A.1.1 Selling Prices

The selling price will be set below the market price since the company transacts

primarily with retailers. Selling price will be based on the variant of the product and its relative

cost to make. Sales will be recorded using cash basis. Commented [u2]: * 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.
Smoked Bottled Roundscad Market Price Selling Price * The increased sales in the month of April May and December
which is 50% to 200% was based on the interviewed retailers.
In Corn Oil Php. Php. * 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.
Spicy Php. Php.

Sweet and Spicy Php. Php.

Adobo Php. Php. Commented [u3]: Update sa financials

Table 1. Relative Prices of Bottled Smoked Roundscad

Based on the survey conducted by the proponents, Smoked bottled roundscad retailers

agree on a cash basis method to record sales.

A.2 Production

GG Norte will utilize the perpetual inventory system in accounting its

merchandise inventories. This method allows inventory quantity and availability to be

updated on a continuous basis as a function of doing business. Moreover, full-absorption

costing will be used in maintaining cost of goods sold and First-in, first-out (FIFO) will be

used as the cost flow assumption.

Commented [u4]: * Perpetual inventory system as accounting

 Direct Materials
The direct materials include smoked roundscad, jar bottles, corn oil and
various flavorings such as chilli, pepper, soy sauce, carrots and pickles. 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
* 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.

covering the one-month production every 1st week of the month. All purchases will

be made on cash basis.

 Direct Labor

This includes wages of the production staff which is Php 35.00 per kilogram of

smoked roundscad and a Php16.00 per year per employee based on the standards

set aside by DOLE. The direct labor cost is inventoriable and will form part of the

total production cost.

 Manufacturing Overhead Commented [u5]: Insert Assumptions for product cost

The manufacturing overhead will include the lease rentals and the

depreciation of the company’s operating assets such as industrial pressure cookers,

gas stove and stainless table—which will form the fixed overhead. The variable

overhead will include the portion of the utilities used in production and the gasoline

supply for cooking the products.

A.3 Expenses

A.3.1 Marketing

Total marketing expense for the year amounts to Php000000 which includes

Php000000000 that will be incurred in the Direct Marketing, Php000000 for featuring the

product in Trade fairs, Php 4,000 for promoting the company’s products on social media

and Php0000 in free taste booths that will be situated in *insert prime locations for

booths. This will be incurred in year 5 to 10 for promoting the business and the products

offered by the company. Commented [u6]: Insert actual values

A.3.2 Pre-Operating Expenses

Pre-operating expense will amount to Php2,673.00 which will be used to secure

the acquisition of kitchen tools that are necessary in starting up the business operation.

A. 3.3 Operating Expenses

Delivery Expense

Delivery Expense will be incurred from the delivery of GG Norte smoked bottled

roundscad to retailers. The cost to deliver based on tricycle contracting rates is 000000. Commented [u7]: Insert Value

Depreciation Expense

The depreciation of the equipment used in production is inventoriable and

therefore forms part of the product cost and is allocated to the manufacturing overhead

using straight-line method.

 Salary Expense

Wage expenses will be incurred for manufacturing smoked bottled roundscad.

These expenses are inventoriable costs which are included in computing the product

costing.

Activity Number of persons Wage rate

Manufacturing of smoked bottled 4 Php35.00/kilogram

roundscad

A. 3.4 Administrative Expenses

Supplies Expense

The office supplies needed in the management of the company will be purchased

in the market.

Office Equipment – Depreciation Expense

The office equipment used for administrative activities will be depreciated and

expensed using the straight-line method.

B. Investing Assumption

B.1 Property, Plant, and Equipment

The company will use Straight Line Depreciation Method (full year convention) in

depreciating its plant assets. Useful life and salvage value of plant assets is as follows: Commented [u8]: Insert depreciation schedule yung naka-
table.
C. Financing Assumptions

C.1 Assumptions on Liabilities

PhilHealth, Pag-IBIG and SSS Payable

 The contribution of the employes’ Philhealth, Pag-IBIG and SSS for the operating

period will be accrued by the company and will be paid immediately when the

date of payment arises.

C.2 Assumptions on Equity

 An initial investment of Php500,000 worth of cash will be contributed by the

seven general partners in the amount of Php71,430 each. In addition, Ms. Rica

will lease her rental property to be used in the company’s operations at 10,000

pesos each month.