Assumptions

 Production Days and Business days

o The overall business operation will run for 12 months a year, 20 days per month,
Mondays to Fridays, and 8 hours per day. Thus there will be 240 working days
per year.

o The manufacturing operations will run for 10 months and the remaining 2 months

will be for maintenance of the machines and equipment. The company will

manufacture on the months of January to May and July to November. The

production of zeolite will halt during the months of June and December for

maintenance purposes.

o Zeolaub will begin its fiscal year every January of the first five years of
operations. The operating year will start in the first day of January in each of the
first five years.

 Source and Cost of Raw Materials

o Production materials will be sourced out from the company’s trusted supplier with

the prices listed below in Table 5.1:

Material Quantity Price

Bamboo Leaves 1000 kg P 100.00

Distilled Water 6L P 72.60

Hydrochloric Acid (HCl) 1 Ton P 36,176.00- P 51,680.00

Sodium Hydroxide (NaOH) 1 Ton P 37,209.60- P 41,344.00

Aluminum Hydroxide 1 Ton P 25,840.00- P 51,680.00

Table 5.1. List of raw materials cost for the Zeolaub’s Zeolite
  Employees and Personnel
o The salaries and wages of the employees will be based on their status. Table 5.2

shows the number of staff per position and each one’s employment status.

Table 5.2. Number of staff and employment status per position

Salaries and Wages

Position No. of Staff Status

General Manager 1 Regular

Operations Manager 1 Regular

Finance Manager 1 Regular

Production Personnel 14 Contractual

Chief Research and Development Officer 1 Regular

Laboratory Assistant 1 Regular

Driver 2 Contractual

● The General Manager will work for 12 months a year with monthly rate of P32,000.

That is a total of P384,000 annually.

● The Operations Manager will work for 12 months a year with monthly rate of

P29,000. That is a total of P348,000 annually.

● The Finance Manager will work for 12 months a year with monthly rate of P27,000.

That is a total of P324,000 annually.

 ● The Production Personnel will be contractual employees with 10 consecutive

months’ work per year, 216 days, and 8 hours per day. Table 5.3 provides the details

of Zeolaub’s estimated yearly expense on Production Personnel.

Table 5.3. Estimated yearly expense on Production Personnel

Production Personnel

No. of Employees Daily Rate Days Yearly Pay

14 P 365.00 24 P 1,226,400.00

▪ The Chief Research and Development Officer will work for 12 months a year with

monthly rate of P30,000. That is a total of P360,000 annually.

▪ The Laboratory Assistant will work for 12 months a year with monthly rate of

P20,000. That is a total of P240,000 annually.

▪ The delivery will be done twice a year. The delivery will be on the months of June

and December and two (2) days will be allotted to each stated delivery months. The

two truck drivers will be contractual employees with a daily rate of P365. That is a

total of around P1,460 annually per driver and combined will be P2,920 annually.

▪ Employee benefits will be deducted to the workers’ salaries.

 Source of Capital
o The business capital is obtained from the partner’s contribution and loan from a
bank. The total shares contributed by partners are P 31,500,000.00 and with the
additional money from the loan worth of P 22,050,000.00, and the total money
used for the business is worth of P 53,550,000.00.

o One member of the partnership will provide a land as her contribution to the

business capital.
  Production Forecast
o For the first year of manufacturing operation, 10 tons will be produced; second year will
be 15 tons; and 3rd to 5th year will be 20 tons.
 Sales Forecast
o The sales forecast for the first and second year will be 90% of the total production; third
and fourth year will be 95%; and fifth year will be 98%.
 Inventory
o The remaining stocks will be considered as the ending inventory of each year.
 Transportation Costs

o The company will rent a 10-wheeler truck for P5,999.00 per day, with a total

annual cost of P23,996.

 General and Administrative Expense

o Office supplies expenses are assumed to cost P 7,000 per year.

 Utilities Expense

o The company will use electricity, water, internet, and telephone as its utilities.

Table 5.4 shows the company’s estimated yearly utilities expenses

Table 5.4. Estimated yearly utility expenses

Utility Expense

No. of months Yearly

Electricity P 11.56/ kilowatt 12 P 295,200.00

Water P20/m3 12 P 7,200.00

Internet and Telephone P1599/ month 12 P19,188.00

 Tax Expense

o Taxes are assumed to be 30% of the business earnings. This will apply after the

10-year property tax incentive of the province of Iloilo.

 Land
o One member of the partnership will provide a land as her contribution to the
business capital.
 Plant and Administrative Building
o The manufacturing plant will be constructed in the contributed land. The administrative
building will be placed inside the plant.
 Estimated Useful Life and Depreciation Expense of Land, Building and Equipment

The company will employ straight-line depreciation.

Table 5.5. List of depreciable assets and their respective estimated useful years.

Depreciable Assets Useful Years

Plant with Administrative Building 50

Weighing Scale 15

Washing Equipment 20

Cutting Machine 20
Pyrolyzer 20

Oven 20

Furnace 15

Mixer 15

Steel Barrels 5

Fork Lift 20

Push cart 5

Conveyor belt 20

Steel pipe 5

Storage tank 12

Laptop 5

Aircon 15

Printer 5

 Loan
 Promotion
o The pre-operating expense for the promotions is assumed to cost P50,000.00
 Other Assumptions
 o On the first year of the business operation, the Zeolaub will be able to penetrate

50% of the market and for the next years, they will gradually yield an increase

until they fully established and build a name in the industry.

o There will be no accounts receivable since the company will impose a 100% payment

upon order policy.

Product Costing

Table 5.6. Direct material cost for 1 ton of zeolite at lower range of price
1 Ton of Zeolite per Month @lower range of price

a. Raw Materials Amount Price per given Price

measurement

Bamboo-leaf 2,000 kg P 100.00 per 1000kg P 200.00

Hydrochloric Acid (HCl) 2,400 L P 8,721.00 per 1 Ton P 20,930.40

Distilled Water 12,000 L P 12,107.14 per 1 P 145,285.71

Ton

Sodium Hydroxide 800 L P 25,650.00 per 1 P 20,520.00

(NaOH) Ton

Aluminium Hydroxide 52 kg P 15,390.00 per 1 P 800.28

Ton

Total Cost of Raw Materials P 187,736.39

b. Packaging Amount Price per piece Price

Barrel 1 pc. P 450.00/ pc. P 450.00

Total Cost of Packaging P 450.00

Total Cost P 188,186.39

Total Cost in one year P 1,881,863.90

Table 5.7. Direct material cost of zeolite at lower range of price for the first 5 years
At Lower range of price

Total Cost of Direct Years

Material

2020 2021 2022 2023 2,024

a. Raw Materials

Bamboo-leaf
200.00 195.00 190.00 185.00 180.00

Hydrochloric Acid (HCl)

20,930.40 20,930.40 20,930.40 20,930.40 20,930.40

Distilled Water
145,285.71 145,285.71 145,285.71 145,285.71 145,285.71

Sodium Hydroxide
(NaOH) 20,520.00 20,520.00 20,520.00 20,520.00 20,520.00

Aluminium Hydroxide
800.28 800.28 800.28 800.28 800.28

b. Packaging
Barrel
450.00 450.00 450.00 450.00 450.00

TOTAL COST
188,186.39 188,181.39 188,176.39 188,171.39 188,166.39