You are on page 1of 131

Squash-Carrot-Malunggay Cookies

A Feasibility Study Presented to the Faculty of the


Department of Accountancy
School of Accountancy and Business Management
Saint Louis University, Baguio City

In Partial Fulfillment of the Requirements


of the Course Feasibility Study (Accounting 403B)

By:
Fangon, Karl Marion V.
Espejo, Fenella Mae E.
Fetalco, Dannilyn B.
Lucero, Agnes A.
Padilla, Rhoby Lye V.
CHAPTER I
EXECUTIVE SUMMARY
Name of the Enterprise
V-Co is a manufacturing company that produces vegetarian cookies. The finished product is
composed primarily of organic ingredients like carrot, squash and malunggay. The name is derived from
the nature of our product which is Veggie-Cookies in short V-Co.

Logo of the Enterprise

V-C
Eat healthy, Live
Location of the Enterprise
healthy
Instead of constructing a new building for the location V-Co, the researchers chose to rent a space
at Roman Ayson Road Campo Filipino Baguio City. The area is chosen due to its proximity to where the
raw materials can be acquired.

Vision and Mission Statement

Vision: We envision V-Co as a part of transformation of the communities into having a more healthy
living and be recognized in the country.
Mission: To provide a satisfying snack and encourage people to live healthy.

Projects Long Range Objectives

V-Co aims to be one of the best producers of cookies in the food industry by offering vegetable
cookies. The business aspires to have a growing number of customers and maintaining their loyalty. The
business aims to be promoted in nearby localities such as La Trinidad, Itogon and Tuba and sooner or
later marketed to distinct provinces like Ilocos Norte, Ilocos Sur, Nueva Ecija, Pangasinan and La Union.

Feasibility Criteria

The purpose of this study is to determine the viability and profitability of manufacturing
vegetable cookies. Specifically, it aims to determine the level of demand, the supply and demand gap for
the cookies in the area, determine the capital requirements and the financing that will be needed by the
business in the start of its operations.
Major Assumptions and Summary of Findings and Conclusions

Market Study
The market study portion of this feasibility study is important to make sure if sufficient demand is
present for V-Co to be proposed to the target customers. Aside from their willingness to buy our product,
this portion also establishes the capacity of V-co to get ahead of the competition from other companies
which produces the same kind of product. Since our product is naturally made, it caters almost everyone
like children, teens and adults, especially those who are health conscious.
From the conducted survey, 81.56% of the population is willing to buy the proposed product once
it was made available to the public. In the projected demand, Statistical Parabolic Curve was used since it
has the least value of standard deviation among the other methods. In coming up with the supply side, the
researchers conducted a survey by floating questionnaires around Baguio City. In forecasting the future
supply, the method used is also the Statistical Parabolic Curve since it has the least value among all
methods used.
To determine whether there is unsatisfied demand, the proponents associated the demand and
supply for that given year. For the computation of the unsatisfied demand, the actual projected demand is
deducted from the actual projected supply of the same year. In the same section of the study, illustrated in
Table 12, the unsatisfied demand for the years 2017-2022 are 98,325,808, 100,475,014, 102,599,535,
104,699,373, 106,774,527 and 108,824,997 respectively.
V-Co expects itself to be recognized for its organically made, delicious and affordable cookies.
The marketing strategy used to disperse about the V-Cos existence is the distribution of flyers.
Technical Study
V-Co will be located located at Roman Ayson Rd., Campo Filipino, Baguio City. Production of
cookies shall be conducted daily excluding regular holidays and special non-working holidays, and
Sundays. Regular holidays are considered as non-working day while supplemental and special holidays
are considered as working holidays. There will be two production cycles each day. Each production cycle
produces 50 packs of squash-carrot-malunggay cookies. There will be one shift per day, which is from
8:00 am-5:00pm, Monday to Saturday. Lunch break is at 12:00pm- 1:00pm and break time is at 10:00am-
10:15am in the morning and at 3:00pm-3:15pm in the afternoon. The total operating days per year is 288
days excluding Sundays, and Supplemental holidays to achieve the optimal capacity per day which is 100
packs which will be distributed to other enterprises that are willing to market the product. The production
site will have an area of 16 square meters that will provide for the small office, comfort room and the
production area
The total project cost includes manufacturing equipment, furniture and fixtures, factory and office
supplies and tools, prepaid rent, organizational costs, raw materials, labor cost, pre-advertising expense,
utilities expense, and unexpected costs. The cost of the project will be financed by the cash contributions
of the partners, where the excess of the investment over the project cost will be deposited to the bank to
generate other source of income. All of the finances are to be contributed upon by the partners equally.
Financial Study
This study will cover the detailed information on project cost, initial capital requirements, financial
statements, income statements, financial analysis and the sources of finance.
Based on the financial projections of the enterprise, it will have an income of Php 98,037.24 , Php
170,477.67, Php 248,501.28, Php 338,639.03, Php 441,708.09 in the year 2018-2022, respectively and it
is an increasing trend. The net income from year 2019 increases by 73.89%, 45.77% on 2020, 36.27% on
2021, and 30.44% on 2022. Gross profit ratio, return on owners equity, return on assets, return on sales
shows an upward trend. These profitability ratio simply that the company is be able to recover its costs
and other expenses, however, the ratios indicate that the profitability of the business may still need to be
improved by purchasing lower priced raw materials without sacrificing the quality.
Based from the enterprise, liquidity ratios; both current ratio and acid test ratio, indicates that the
enterprise is very liquid that it has the ability to pay currently maturing obligations. The leverage ratios
show the financial stability to the business as operations will be able to continue without the need for debt
financing.
For its payback period, the enterprise will be able to recover its invested fund within 376 days,
from the start of the business operations. The shorter the payback period compared to the useful life of the
assets, other things held constant, the greater the project liquidity, the better.
Socio-Economic Study

The socio-economic aspect of this is study will show the importance of the business to the
external factors affecting its operation together with its employees. The objective of this aspect is to
determine how the project will be able to affect the social, environmental and economic aspect of the
community and in the long-run, the positive changes of the society.

The enterprise does not only aspire to generate profit but also aims to contribute to the welfare
and betterment of the economic status of the city. To achieve this, the business will be paying their taxes
promptly, providing employment, following laws and norms, and imposing health consciousness. A
specific method to be done is by opening jobs to improve the standard living of the workers and open
opportunities for change. The taxes and fees paid to the government would increase revenue of the same
and strengthen the capability of the city in financing development projects such as betterment of roads
and infrastructures, health and educational programs, and community services. By selling V-Co in Baguio
City, the business will create an opportunity for the suppliers of raw materials to increase their earnings
and market.

V-Co is a vegetarian style of cookie. This significantly promotes a healthy living and helps the
community realize that health is also wealth. V-Co serves cookies in an environmental friendly
packaging. This would help lessen the burden on the environment as so much waste is produced every
day solely from cookies due to the use of plastic packs.

Management study

To ensure that the business will operate on its full potential, there is a need to establish an
efficient and effective management system. The enterprise will hire two bakers, one bookkeeper, and one
production manager. The basic requirements and qualifications that are needed are taken into
consideration. The business will hire residents of Baguio City. The proposed compensation will be
reasonable enough according to the minimum wage set by the Department of Budget and Management
and Department of Labor and Employment and the enterprises direct laborers are paid by result.

Accounting Study
The Accounting System portion includes the different cycles that are taking place inside a
manufacturing company like Revenue, Expenditure, Production and Payroll cycle. All of these cycles are
documented in a flowchart with their corresponding narrative descriptions including their threats like theft
of assets, inconsistencies, erroneous records, etc. with their respective explanation on how to control
them. This phase focuses on the proper and efficient delivery of information to perform necessary
accounting work and to assist in delivery of accurate informative data to the users of financial statements.
CHAPTER II
MARKET STUDY

I. Introduction
The researchers thought of proposing the product in this study to make an analysis and estimation
on how demandable the product is. Since the market today is very competitive, this study will help the
researchers to be prepared for them to meet the market's demand. The product will be described detail by
detailed in this chapter for the reader to have an idea of the product being introduced, and convincing
them to patronize it.
II. Product Description
1. Name of the Product
The proponents decided to name the product as V-Co. The proponents named it such
because it represents the combination of names of the vegetables which is squash, carrot and
malunggay leaves, and for the customers to easily know what the product is made of.

2. Properties of the Plant


V-Co is made up of squash, carrots, dried malunggay leaves, flour, sugar, baking powder,
butter and eggs. Each cookie is 27 grams and distributed in 3 pieces per pack. The main
ingredients of the product are squash, carrots and dried malunggay leaves.
III. Uses of Product
Our product is a healthy cookie made out of the combined nutrients from squash, carrots
and malunggay leaves. This product could be a very good substitute for junk foods during snacks.
This environmental friendly cookie doesnt have any chemical content that could harm the
consumer. Because of its vegetative content, many health benefits can be derived from eating this
kind of cookie such as, eye sight quality improvement, boosts skin health and strengthens the
immune system. This cookie will not just satisfy cravings but also satisfies the stomach and the
entire body.

IV. Major Customers of the Product


Our product caters to everyone especially the individuals of Baguio City. Since our
product is naturally made, it can be consumed by children, teens and adults, especially those who
are health conscious.
V. Geographical Areas of Dispersion
V-Co plans to rent at Roman Ayson Rd., Brgy. Campo Filipino, Baguio City for the
reason that it is near the market wherein the proponents get the raw materials needed; it is
advantageous and suitable to the enterprise because it is very accessible to the retailers.
VI. Demand Analysis
The demand for the product is determined to identify whether there is a need or a want that is not
being met in the market. The analysis is used to identify who are willing to buy the product and the
quantity they might purchase. All necessary data are acquired via survey that was conducted to 450
members of respondents around Baguio City. The survey was made through a questionnaire checklist
composed of eight (8) questions.
Table 1
Historical Population
Year Population
2012 342,897
2013 351,735
2014 360,801
2015 370,100
2016 378,586
Source: Philippine Statistics Authority (PSA)
Table 1 shows the historical population of the individuals of Baguio City for the years 2012-2016.
The proponents used the Slovins Formula to determine the number of respondents for the feasibility
study.
Where:
n = Sample size
N = Household population for 2016
e = Margin of error (5%)
Slovins Formula:
Where:
N= Total Population of Baguio City
e= Marginal Error which is equal to 5%
n= Total Sample Size of Baguio City

Solution:
n= N / (1 + Ne2)
n= 378,586 / (1+ (378,586*(0.05)2)
n= 399.58= 400
The last population of 378,586 is used to determine the sample size of 400.

Question # 1: Do you eat cookies?


TABLE 2.1. FREQUENCY OF RESPONDENTS EATING COOKIES
Total Percentage
Yes 434 96.44%
No 16 3.56%
Total 450 100%
The researchers need this data in order to compute the historical demand for the year 2012-2016.
The table above shows that consumers are patronizing cookies. There is still a higher demand for the
product which can give profitability for the enterprise.
Question #2: How often do you eat cookies?
TABLE 2.2. FREQUENCY OF RESPONDENTS ON HOW OFTEN THEY EAT COOKIES
Total Percentage
Daily 33 7.60%
Once a week 105 24.19%
Once a month 119 27.42%
Twice a week 83 19.12%
Twice a month 60 13.82%
Others 34 7.83%
Total 434 100%

The table shows the frequency of respondents who eat cookies. Most of the products regularity
avail by the consumer is mostly done once a month with 27.42%. This indicates that there is a possibility
for growth in the demand and consumption of the product and with that, the proponents will ensure
enough cookies during the month.
Question #3: How many cookies do you usually eat?
TABLE 2.3. FREQUENCY OF RESPONDENTS ON HOW MANY PIECES THEY CONSUME
Total Percentage
1-3 pieces 168 38.71%
4-6 pieces 186 42.86%
7-9 pieces 30 6.91%
10-12 pieces 27 6.22%
13-15 pieces 18 4.15%
Others: 5 1.15%
Total 434 100%

The researchers need this data to give an idea what pack of cookies that consumers mostly
consume. This will help the researchers in deciding what pack of cookies will be produced. The table
above shows that nearly half of the respondents opt to buy the 4-6 pieces/ pack of cookies and this only
means that most of the respondents prefer to buy cookies with a packaging of 4-6 pieces which means
that cookies are in demand to individuals that helps the proponents to pursue the business.
Question #4: How much do you usually pay for your choice in no. 3?
TABLE 2.4. FREQUENCY OF RESPONDENTS ON HOW MUCH THEY PAY FOR THE
COOKIES
Total Percentage
5-10 pesos 162 37.33%
11-20 pesos 149 34.33%
21-30 pesos 38 8.76%
31-40 pesos 16 3.69%
41-50 pesos 55 12.67%
Others: 14 3.23%
Total 434 100%

The researchers need this data to give an idea on how much the consumers usually spend for a
pack of cookies. This will help the researchers in setting up the selling price per unit of the proposed
product. The table shows that the respondents usually pay 5-10 pesos for a pack of cookies due to
practicality reasons. While only 3.23% or 14 of the respondents answered more than 50 pesos for it might
be within their budget.

Question #5: If we will introduce squash-carrot-malunggay cookies (regular sized), are you willing
to buy?
TABLE 2.5. FREQUENCY OF RESPONDENTS WILLING TO BUY SQUASH-CARROT-
MALUNGGAY COOKIES
Total Percentage
Yes 367 81.56%
No 83 18.44%
Total 450 100%

The data above exhibits the favorable response of respondents involving the production of
squash-carrot-malunggay cookies. The results from the questionnaire show that out of 450 respondents,
367 or 81.56% are willing to buy squash-carrot-malunggay cookies while 83 or 18.44% answered-Noll.
This indicates that there are more people who are willing to try the new product on the market compared
to those who are reluctant to do the same. It also indicates that the feasibility on the products
marketability is high.

Question #6: How often are you willing to buy?


TABLE 2.6. FREQUENCY OF RESPONDENTS ON HOW OFTEN ARE THEY WILLING TO
BUY
Total Percentage
Daily 17 4.63%
Once a week 113 30.79%
Once a month 99 26.98%
Twice a week 86 23.43%
Twice a month 36 9.81%
Others: 16 4.36%
Total 367 100%

The total of the 367 respondents found on Table 2.5, pertains to those who answered YES in the
previous question (see Table 2.5). The results show that 113 or 30.79% of the respondents are willing to
buy the product in a weekly basis.

Question #7: How many cookies are you willing to buy?


TABLE 2.7. FREQUENCY OF RESPONDENTS ON HOW MANY PIECES ARE THEY
WILLING TO BUY
Total Percentage
1-3 pieces 209 56.95%
4-6 pieces 119 32.43%
7-9 pieces 19 5.18%
10-12 pieces 12 3.27%
13-15 pieces 5 1.36%
Others: 3 0.82%
Total 367 100%

From the 367 out of 450 respondents who answered YES in the previous question (see Table
2.5), 209 or 56.95% of them are willing to buy the product in a 1-3 pieces per pack of squash-carrot-
malunggay cookies. The query regarding the respondents desired pack of squash-carrot-malunggay
cookies is in relation to the business strategies used by V-Co in satisfying the wants of potential
customers. Having an idea of what consumers like in terms of packs lends a helping hand to the
researchers in formulating a better scheme in developing squash-carrot-malunggay cookies that will be
welcomed in the marketplace.

Question #8: How much are you willing to pay for a squash-carrot-malunggay cookies?
TABLE 2.8. FREQUENCY OF RESPONDENTS ON HOW MUCH ARE THEY WILLING TO
PAY FOR A PIECE OF THE PRODUCT
Total Percentage
5-7 pesos 158 43.05%
8-10 pesos 104 28.34%
11-13 pesos 52 14.17%
14-16 pesos 40 10.90%
17-19 pesos 12 3.27%
Others: 1 0.27%
Total 367 100%

The table shows that the respondents are willing to pay 5-7 pesos for a piece of squash-carrot-
malunggay cookie. The query regarding the respondents the price for a piece of squash-carrot-malunggay
cookie is in relation to business strategies used by V-Co in coming up with the appropriate price.

TABLE 3. COMPUTATION OF AVERAGE ANNUAL DEMAND


Total Demand
No. of No. of (in pieces)
Frequency Quantity Average (A) occurrence (B) Respondents (C ) (A*B*C)
1-3 pcs 2 15 10,800
4-6 pcs 5 15 27,000
7-9 pcs 8 1 2,880
10-12 pcs 11 2 7,920
13-15 pcs 14 1 5,040
Daily 16-18 pcs 17 360 1 6,120
1-3 pcs 2 50 5,200
4-6 pcs 5 46 11,960
7-9 pcs 8 6 2,496
10-12 pcs 11 2 1,144
13-15 pcs 14 2 1,456
Once a week 16-18 pcs 17 52 0 -
1-3 pcs 2 52 10,816
4-6 pcs 5 51 26,520
7-9 pcs 8 7 5,824
10-12 pcs 11 2 2,288
13-15 pcs 14 5 7,280
Twice a week 16-18 pcs 17 104 0 -
1-3 pcs 2 26 624
4-6 pcs 5 40 2,400
7-9 pcs 8 6 576
10-12 pcs 11 8 1,056
13-15 pcs 14 5 840
Once a month 16-18 pcs 17 12 0 -
1-3 pcs 2 12 576
4-6 pcs 5 24 2,880
7-9 pcs 8 6 1,152
10-12 pcs 11 9 2,376
13-15 pcs 14 4 1,344
Twice a month 16-18 pcs 17 24 2 816
1-3 pcs 2 12 24
4-6 pcs 5 11 55
7-9 pcs 8 4 32
10-12 pcs 11 4 44
13-15 pcs 14 1 14
Others 16-18 pcs 17 1 2 34
Total 434 149,587
Average Annual Demand per Individual 345

In Table 9, the frequencies assumed in the production of squash-carrot-malunggay cookies were


daily (with an occurrence of 360 times in a year), Once a week (with an occurrence of 52 times a
year), Twice a week (with an occurrence of 104 times a year), Once a month (with an occurrence of
12 times a year), Twice a month (with an occurrence of 24 times a year) and Others (with an
occurrence of once in a year) . In order to compute for the average demand per individual, the total
demand is needed. Total demand is calculated by getting the product of the Average (A), No. of
Recurrence (B), and No. of Respondent/s (C). To be able to come up with a definite average, for it is a
factor in the computation of total demand, the researchers made use of the range 16-18 pcs in
replacement of Others quantity cluster. Finally, the average demand per individual is calculated by
dividing the total no. of respondents from the grand total demand. Due to the scale of measurement used
(in terms of units) for the average demand per individual, the researchers rounded-up the resulting
quotient. For the basis of the data pertaining to the no. of respondents column, please refer to Table 2.1.

With the table provided above, the computed average demand per individual is 345 pieces
(rounded-up from 344.67 pieces).

TABLE 4. HISTORICAL DEMAND


Consumption Historical Demand
Population Percentage of respondents C Rate (E)
Year
(A) who eat cookies (B) (A*B) (D) (C*D)

201 330,689.87
345 114,088,004
2 342,897 96.44%
201 339,213.23
345 117,028,566
3 351,735 96.44%
201 347,956.48
345 120,044,987
4 360,801 96.44%
201 356,924.44
345 123,138,932
5 370,100 96.44%
201 365,108.34
345 125,962,377
6 378,586 96.44%

In Table 4, the researchers were able to obtain the total demand (in pieces) for the years 2012-
2016 by multiplying the data in the following columns for each year (2012-2016): Historical population
(A), Percentage of respondents who eat cookies (B) , population of respondents who eat cookies
(C),Consumption rate (D) and Historical Demand (E). The 96.44% of willing respondents is presented in
Table 6 while the average demand per individual is shown in Table 9.
The data above shows the consumption of cookies from 2012 to 2016.According to the results,
the trend on the demand for cookies is increasing as the years pass. There are roughly 126 Million
demands for cookies on 2016 which is approximately 3,000,000 units more than the demand from 2015.
TABLE 5. SUMMARY OF THE METHODS OF PROJECTION FOR DEMAND
Methods of Projection Standard Deviation
Arithmetic Straight Line Method 149,150
Arithmetic Geometric Curve Method 3,199,683
Statistical Straight Line Method 124,489
Statistical Parabolic Method 52,428

The table below shows the different methods of projection to get the standard deviation of the
demand for cookies. The projected demand was computed using the statistical parabolic method because
out of four methods it has the least computed value of the standard deviation. Having a least standard
deviation, the statistical parabolic method will give the most accurate computation in the projected
demand. For the computation of Statistical Parabolic Method, proceed to appendix __.
TABLE 6. ACTUAL PROJECTED DEMAND
Projected Demand Percentage of Willingness Actual Projected Demand
Year
(A) (B) (A*B)
2017 128,931,951 81.56% 105,156,900
2018 131,839,508 81.56% 107,528,302
2019 134,724,676 81.56% 109,881,446
2020 137,587,458 81.56% 112,216,331
2021 140,427,853 81.56% 114,532,957
2022 143,245,860 81.56% 116,831,323

The table shows the actual projected demand for the next 6 years. The researchers were able to
obtain the Actual Projected Demand (in pieces) for the years 2017-2022 by multiplying the data in the
following columns for each year (2017-2022): Projected Demand (A), Percentage of Willingness (B) and
Actual Projected Demand (C). The table indicates that the Actual projected demand is increasing in the
succeeding years. It also shows the required percentage of the proponents will need to produce in order to
suffice the willingness to buy of the consumers. For the computation of the historical population of years
2011-2015, refer to Appendix __.
VII. Supply Analysis
In the conduct of the study, the researchers enumerated some of their competitors which directly
affect the sale of the product. In connection with this, the researchers conducted an interview to the
competitors which will support the study. The competitors willingly took part in providing certain
information needed to complete the study. The following information shows the total number of packs of
cookies being sold daily by each competitor and their annual sales percentage of increase and decrease.
As a result, the method which has the least standard deviation is used.
TABLE 7. COMPETITORS DAILY DISTRIBUTION AND INCREASE (DECREASE) IN SALES
OF COOKIES
Daily Sales Percentage of Increase
Volume (Decrease) of Sales
Pack (per piece) (in pieces) Annually
Enterpris 10-12 13-15
e 1-3 pcs 4-6 pcs 7-9 pcs pcs pcs
A - - 4,320 - - 4,320 5%
B - - 320 - - 320 6%
C 350 - - - - 350 0.43%
D 40 - - - - 40 6.50%
E - - - 216 - 216 10%
F - - - 12,000 - 12,000 -1%
G 440 - - - - 440 5%
H 400 - - - - 400 2%
I 50 - - - - 50 -1%
J 80 - - - - 80 0%
K 160 - - - - 160 3%
Total 1,520 - 4,640 12,216 - 18,376 35.93%

This table shows the number of cookies that each competitor can sell per day as well as the
percentage increase or decrease in their annual sales. It shows that there are competitors who can sell
more while the others can sell the same number of cookies with that of the previous year. The proponents
floated 11 supply questionnaires to the competitors.
TABLE 8. ANNUALIZED SUPPLY
Total annual sales
Enterprise 1-3 pcs 4-6 pcs 7-9 pcs 10-12 pcs 13-15 pcs (in pieces)
A - - 1,555,200 - - 1,555,200
B - - 115,200 - - 115,200
C 126,000 - - - - 126,000
D 14,400 - - - - 14,400
E - - - 77,760 - 77,760
F - - - 4,320,000 - 4,320,000
G 158,400 - - - - 158,400
H 144,000 - - - - 144,000
I 18,000 - - - - 18,000
J 28,800 - - - - 28,800
K 57,600 - - - - 57,600
Total 547,200 - 1,670,400 4,397,760 - 6,615,360
Table 8 shows the computation of the annualized supply of all each competitor. The total annual
sales in pieces would be used in the computation for the annual supply for 2016. This information will be
relevant in computing the average annual supply for the year 2016.
TABLE 9. COMPUTATION OF ANNUAL SUPPLY
Total Annual Sales 6,615,360
Divided by: Most pieces consumed (Average) 11
Average Annual Consumption 601,396
Divided by: Number of Respondents 11
Average Annual Supply per Competitor 54,672
Multiplied by: Total Number of Direct competitors in Baguio City 15
Annual Supply for 2016 820,080

The table above shows the computation of Annual Supply for the year 2016. The researchers
floated 15 supply questionnaires to the competitors but only 11 responded for confidentiality purposes.
The annual supply for the year 2016 will be used in computing the historical supply in order for the
researchers to compute the historical supply for the year 2012-2015.
Average Annual Increase in Sales
Total % of Increase 35.93%
Divided by: Number of Respondents ____11
Percentage change 3.27%

TABLE 10. HISTORICAL SUPPLY


Year Historical Supply
2012 721,040
2013 744,618
2014 768,967
2015 794,113
2016 820,080

Using the computed supply for 2016, the computation for the historical supply of 2015 is by
dividing the demand for 2016 by 103.27% based from the average increase of customers shown in Table
9. Then the computed demand for 2015 is divided again by 103.27% to get the demand for 2014 and so
on. This table shows the historical supply from 2012 to 2016. This means that the supply is low thats
why the enterprise needs to produce more squash-carrot-malunggay cookies to satisfy the needs of the
consumers.
TABLE 11. SUMMARY OF MATHEMATICAL METHODS FOR SUPPLY
Methods Standard Deviation
Arithmetic Straight Line 2,322
Arithmetic Geometric Curve 10,616
Statistical Straight Line 14,526,949
Statistical Parabolic 7

Table 10 shows the summary of the Standard Deviation of the different methods used to
determine which method has the least value. The Statistical Parabolic Curve will be shown in the further
discussion since it has the least value for the computation of the projected supply to be used in the
computation of the unsatisfied demand. For the computation of statistical parabolic method, refer to
appendix __.

VIII. Demand Supply Analysis

The demand-supply analysis is necessary to analyze if there is unsatisfied demand or supply. It


encompasses the evaluation of a good or service on the basis of factors affecting its supply and demand. It
determines if an inequity exits or will exist between supply and demand which incorporates information
on manufacturing capacity and many other factors that influence availability and purchases of the
products.

TABLE 12. HISTORICAL DEMAND-SUPPLY ANALYSIS


Total Historical Total Historical Shortage in Rate of Short Supply
Year Demand (A) Supply (B) units (C ) (A-B) over Demand (C/A)
2012 114,088,004 721,040 113,366,964 0.993679964
2013 117,028,566 744,618 116,283,947 0.993637295
2014 120,044,987 768,967 119,276,020 0.993594341
2015 123,138,932 794,113 122,344,819 0.993551085
2016 125,962,377 820,080 125,142,297 0.993489485

In Table 12, the computation for market shortage (in pieces) of squash-carrot-malunggay cookies
is by subtracting the total historical supply (refer to Table 10) from the total historical demand (refer to
Table 4). On the other hand, the ratio of such shortage (in units) over market demand is determined from
the division of data in column C (Shortage-in units) by the data in column A (Total Historical Demand).
Regardless of how high the supply may seem, the demand for cookies is still too high for the
market to be able to satisfy all the needs of the latter. It is apparent that there is a big shortage in the
supply of cookies. This could mean that the supply market for cookies is still too small and may need a lot
more competitors to join in order to attain market equilibrium. This also means that V-Co is just right to
participate in this market.

During the existence of V-Co, an estimate of the possible shortage or surplus in the market of
cookie products is needed to aid in establishing the normal capacity level of production to be undertaken
by the business entity.
TABLE 13. PROJECTED DEMAND-SUPPLY ANALYSIS
Year Actual Projected Actual Projected Unsatisfied Annual Normal Market Share
Demand (A) Supply (B) Demand(C )(A-B) Capacity (D) (D / C)
2017 105,156,900 846,823 104,310,076 88,500 0.0848%
2018 107,528,302 874,368 106,653,934 88,500 0.0830%
2019 109,881,446 902,710 108,978,736 88,500 0.0812%
2020 112,216,331 931,848 111,284,483 88,500 0.0795%
2021 114,532,957 961,782 113,571,175 88,500 0.0779%
2022 116,831,323 992,513 115,838,811 88,500 0.0764%

The Unsatisfied Demand is computed by deducting the projected demand and projected supply.
The table shows that there is a change per year in the product that the enterprise has the potential to meet
the demands of the consumers by means of enough supply of the product. For the computation of annual
normal capacity, refer to table 16.
IX. Price Study

In economics, the price of a product is determined mainly by the demand-supply situation. In


connection with the study, an increase in demand of cookies a constant supply will make the prices
higher. The reverse would result in the lowering of prices.

TABLE 14. AVERAGE PRICE OF OTHER COOKIE PRODUCTS

NAME OF AVERAGE PRICE PER


COMPETITORS PIECE
Sunshine Bakeshop P 8.00
Victoria Bakery P 15.00
Goldilocks (Baguio Branch) P 5.25
Tartland P 9.50
Panadero P 6.00
Harlem Bakery P 6.00
Cuevas P 3.00
Julies P 4.00
456 P 6.00
Average Price (per piece) P 7.00

The price is a very important consideration because this is the first thing that consumers are
considering before buying a good or service. The average price per piece of cookies is P 7.00. The
enterprise will sell its price that is close to the proposed value above. In arriving at the selling price, the
researchers considered the raw materials used, labor, selling expenses, delivery cost and other expenses
incurred in producing and selling the product. Also, the average price of the competitors is used on the
basis of determining the price of the product.

The researchers plan to sell 3 pieces per pack of cookies therefore the researchers plan to sell this
kind of pack within the range of P 18.00-21.00. With this agreed price, the promoters will assure that the
business will gain sufficient income to support its profit earning goal and to cover all cost incurred. The
external factors would be the prices of other competitors and internal factors would be the over-all cost
incurred in manufacturing the product.
X. Factors Affecting the Market

Factors affecting the demand:

1. Income
The income of an individual will affect the demand because it determines the purchasing
power of a consumer. If the consumer has more than enough income to cover his basic needs then
he has something to cover his basic needs then has something left fir his wants. The income
affects the purchasing power of a consumer proportionately. Thus, an increase in income
constitutes an increase in demand because their purchases power increases and vice versa.

2. Price Competitors
Price is the main determinant of the behaviour of people in The Law of Demand. This
law states that when prices of products increase, the tendency of consumers is to buy less of the
product, and when prices of products decrease. The normal tendency of consumers is to buy more
of a product. Usually people have their income as their fixed budget. Thus, the price of a product
determines the quantity a consumer may be able to purchase from his income.

3. Preferences
A consumers preference is an important factor to look into because it directly influences
the demand for a commodity. If a commodity is preferences by the consumers, the demand for
that certain commodity is less favoured than the demand for it will fall.

Factors affecting the supply:

1. Price of the Input


If the price of the raw materials in making a product increases, the cost producing it will
be more expensive. It will affect the supply because firms will limit the production of their
product due to high cost.

2. Number of Suppliers and Competitors


Competition in the market is something an enterprise cannot avoid of. The number of
participants in the supply side of a market is important in terms of competition and market
control. Market control depends on the number of competitors in a market. Fewer competitors
mean more market control for an enterprise. On the other hand, more competitors mean lesser
market control.

3. Technology
Technology plays an important role in converting inputs into outputs. Technology
facilitates the processing of the resources into products. Using technology, processes can be done
taken quicker in a more uniform way compares to manual labor. Advancing the firms technology
will result to increase in level of production which will provide an enterprise an opportunity to
grow.

4. Legal Provisions
There are certain laws that an enterprise must complied with. Compliance will those laws
provide an additional cost to the enterprise.
XI. Marketing Program

The heart of business success lies in successful marketing strategy. Marketing is a process by
which a product or service is introduced and promoted to potential customers so a marketing program is
highly recommended and it is summarized by the four Ps (product, price, place and promotion).
1. Product
A product is anything that can be offered to a market that might satisfy a want or need. V-
Co is sold at an affordable price. Our product is out of the common due to its vegetative content
that gives health advantage to the consumers. The researcher guarantees that every consumer will
be satisfied because of the flavors and each cookie will be tastier than expected.
2. Price
Price is the value that is put to a product or service and is the result of a complex set of
calculations, research and understanding and risk taking ability. The researchers agreed that the
price of the product will be Php 85.00. The pricing of the product takes into account the ability of
the consumers to pay, market conditions, competitors actions, cost of inputs etc.
3. Place
Place is the process of moving products from the producer to the intended user. This
movement could be through a combination of intermediaries such as distributors, wholesalers and
retailers. The product will be brought to different supermarkets, mini-marts and sari-sari stores
located in the central business district of Baguio City.
4. Promotion
Promotion intends to raise a customer's interest and influence a purchase, and to make V-
Co stand out among its competitors. It encompasses different strategies to endorse the product
such as advertising, direct selling and sales promotion. Products or services require to be
promoted; especially those newly recognized ones for it to be introduced in the market and to
capture the customers interest and loyalty towards the product.
Flyer:
CHAPTER III
TECHNICAL STUDY
INTRODUCTION
Technical Feasibility talks about the production process, the plant structure and different types of
machinery tools to be utilized. It aims to deliver detailed information on the different aspects affecting the
production of V-Co. This part of the process further elaborates the manufacturing process of the product,
the equipment, tools, and machineries used including their prices, and the number of units required in the
production. Additionally, it determines the quantity and quality of the products to be produced. Utilities
used are also considered in this chapter. Provided also are the sources of raw materials, plant layout and
plant location of the enterprise. It also gives information about the total project cost and list of other items
that are to be included in the capital.
A. THE PRODUCT
The main ingredients of V-Co are squash, carrot, and malunggay. Other ingredients include 48
cups of all-purpose flour, vanilla, baking powder, eggs, butter, brown sugar, squash, carrots and
malunggay leaves. The product is packed in a plastic with product label. The cookies are golden brown in
color and circular in shape. It also has rough texture. It weighs 27 grams per pack.

B. MANUFACTURING PROCESS

This stage includes measurement and washing of all necessary ingredients needed. The
manufacturing of cookies per day is 2 batches and will produce 150 cookies approximately per batch. The
process will produce around 300 pieces of cookies or 100 packs of V-Co. Ingredients below are for 50
pieces of cookies.

Step 1: Preparation of the necessary ingredients (30 minutes)

12 cups of all-purpose flour


1/10 teaspoon of baking powder
2 eggs
2/5 cups of butter
6 cups of brown sugar
3 cups of squash
3 cups of carrots
3 1/4 cups of malunggay leaves

Step 2: Washing and peeling of the Vegetables. (30 minutes)

The squash, carrot, and malunggay are washed thoroughly and completely with clean water. The
squash and carrot are also peeled.

Step 3: Grating and drying of the vegetables. (45 minutes)

The squash and carrot are grated while the malunggay leaves are dried under the sun.

Step 4: Mixing of Ingredients (45 minutes)

In a large mixing bowl, put all the ingredients. Stir until soft.
Step 5: Prepare the oven. (20 minutes)

Preheat the oven for 20 minutes.

Step 6: Weighing of cookies. (50 minutes)

The cookies per piece are weighed to 9 grams.

Step 7: Baking (1 hour)

Bake the cookies for 30 minutes per batch in a 350F.

Step 8: Cooling (1 hour)

Remove the cookies in the oven and let it cool for 30 minutes per batch.

Step 9: Handling and Packaging ( 1 hour and 45 minutes)

The cookies are packed in a plastic with label. The product is sealed using a sealer. Store the
packed cookies in the storage room.
C. MANUFACTURING PROCESS FLOW CHART

Preparation of the necessary Ingredients. (30 minutes)

Washing and Peeling of vegetables. 30(minutes)

Boiling and drying of vegetables. (45minutes)

Mixing of all the Ingredients. (45 minutes)

Preparation of the oven. (20 minutes)

Weighing of the cookies. (50minutes)

Baking (1 hour)

Cooling (1 hour)

Handling and Packaging (1 hour and 45 minutes)

Total Hours: 7hours and 25 minutes


D. PLANT SIZE AND PRODUCTION CAPACITY
Production of cookies shall be conducted daily excluding regular holidays and special non-
working holidays, and Sundays. Regular holidays are considered as non-working day while supplemental
and special holidays are considered as working holidays. There will be two production cycles each day.
Each production cycle produces 50 packs of squash-carrot-malunggay cookies.
There will be one shift per day, which is from 8:00 am-5:00pm, Monday to Saturday. Lunch
break is at 12:00pm- 1:00pm and break time is at 10:00am-10:15am in the morning and at 3:00pm-
3:15pm in the afternoon. The total operating days per year is 295 days excluding Sundays, and
Supplemental holidays to achieve the optimal capacity per day which is 100 packs (packed by 3s) which
will be distributed to other enterprises that are willing to market the product.

The maximum annual capacity in hours is 2,920 hours and the annual normal capacity is 2,016
hours, which is 69.04% of annual maximum capacity. They are computed as follows:

Days in Year 365


Multiply by: Number of production hours 8
Annual Maximum Capacity 2,920

Days in a year 365


Legal and Special Holidays ( 15)
Sundays ( 53)
Oven Breakdowns ( 2)
Normal Capacity in days 295
Multiply by Number of Production Hours 8
Annual Normal Capacity 2,360

TABLE 15. COMPUTATION OF MAXIMUM CAPACITY

Capacity per pack Capacity in Hours


produced
Number of pieces of squash-carrot- 300 pieces / day 39 pieces/ hour
malunggay cookies produced per day
Multiply by Maximum Capacities in days 365 2,920
Maximum capacity / year 109,500 pieces 109,500 pieces
V-Co will be producing 300 pieces of squash-carrot-malunggay cookies daily composed of 100 packs
(packed by 3s) which will be produced in two (2) batches, 50 packs from the morning (8:00am-12:00nn)
and also, 50 packs from the afternoon (1:00pm-5:00pm).

TABLE 16. COMPUTATION OF NORMAL CAPACITY


Capacity per piece Capacity in Hours
produced
Number of pieces of squash-carrot- 300 pieces / day 39 pieces/ hour
malunggay cookies produced per day
Multiply by Normal Capacities in days 295 2,360
Normal capacity / year 88,500 pieces 88,500 pieces

E. FACTORY AND OFFICE EQUIPMENT, TOOLS AND SUPPLIES


TABLE 17. FACTORY EQUIPMENT
Factory Equipment Unit Cost Quantity Useful Life
(Description)
Baker's Table
A table whose top is typically wood where the dough is
prepared. It has 4- to 6-inch-high curbing along the rear P 6,000.00 1 unit 10 years
and sides to minimize spillage of flour onto the floor
during preparation. It is the main working area of the
baker.
Cooling Rack (12 layers)
A kitchen utensil that is used for placing cooked foods P 2,500.00 2 units 10 years
onto a surface that will enable the food to be cooled on
all sides after being baked.
Freezer (Upright)
A refrigerator, refrigerator compartment, cabinet, or P 17,950.00 1 unit 15 years
room held at or below 32F (0C), used especially for
preserving and storing food.
Baking Oven
A heating installation for baking bread products; it is
the most important piece of equipment used in P 68,000.00 1 unit 15 years
commercial baking. The average temperature in the
baking chamber is 200300C, and the relative
humidity is 1570 percent.
Liquefied Petroleum Gas (LPG) (50 kgs)
Flammable mixtures of hydrocarbon gases used as fuel P 3,000.00 1 unit 10 years
in heating appliances, cooking equipment, and vehicles.
This will be used for the oven.

TABLE 18. FACTORY TOOLS


Factory Tools Unit Cost Quantity
(Description)
Electric Mixers P 899.00 4 units
A kitchen appliance used to beat, mix or whip batter.
Dough Cutter
A tool used by bakers to manipulate dough. It is
generally a small sheet of stainless steel (approximately P 76.00 4 units
3"5" or 8 cm 13 cm) with a handle of wood, plastic,
or simply a roll in the steel blade along one of the long
sides.
Egg Beaters/Whisk
A hand-held kitchen utensil with rotating blades used P 120.00 4 units
for beating, whipping or mixing.
Flour Sifter
A device used to separate and break up clumps and P 1,499.00 2 units
debris in dry ingredients such as flours and sugars.
Mixing Bowls (4-piece set)
Round bowls of varying sizes that are used for
combining food ingredients when preparing recipes. P 349.00 2 units
Mixing bowls are made of plastic, ceramic, glass,
copper, and stainless steel that range in size.
Bowl Scrapers
A kitchen tool with a flexible blade used for folding, P 63.00 4 units
mixing and scraping dough and batters out of the bowl.
Baking Pan
A metal baking tool often used for baking pastries, P 20.00 20 units
cakes and cookies. It can also be used to mold the
dough.
Sheet Pans P 190.00 4 units
A flat, rectangular metal pan used in an oven.

TABLE 19. OFFICE TOOLS


Office Tools Unit Cost Quantity
(Description)
Calculator
A device that performs arithmetic operations on P 500.00 2 units
numbers. The simplest calculators can do only addition,
subtraction, multiplication, and division.
Telephone
A device that coverts sound and electrical waves into P 700.00 1 unit
audible relays, and is used for communication.
Stapler
A device for fastening together sheets of paper with P 100.00 2 units
staple wires.
Wall Clocks P 300.00 2 units
A clock mounted on a wall that shows the time of day.

TABLE 20. FACTORY SUPPLIES


Factory Supplies Unit Cost Quantity
(Description)
Apron
A protective or decorative garment worn over the front P 60.00 4 units
of one's clothes and tied at the back.
Basin
A wide, round open container, especially one used for P 100.00 2 units
holding liquid.
Brooms P 65.00 2 units
A long-handled brush of bristles or twigs used for
sweeping.
Dish Towel P 7.00 5 pieces
A cloth for drying washed dishes, utensils, and glasses.
Dishwashing Liquid
A detergent used to assist in dishwashing. It is P 80.00 20 bottles (1 liter)
primarily used for hand washing of glasses, plates,
cutlery, and cooking utensils in a sink or bowl.
Dishwashing Sponge
A tool or cleaning aid consisting of porous material.
Sponges are usually used for cleaning impervious P 15.00 5 units
surfaces. They are especially good at absorbing water
and water-based solutions.
Dustpan
A flat handheld receptacle into which dust and waste P 40.00 2 units
can be swept from the floor.
Floor Mop
A mass or bundle of coarse strings or yarn, etc., or a
piece of cloth, sponge, or other absorbent material, P 100.00 2 units
attached to a pole or stick. It is used to soak up liquid,
for cleaning floors and other surfaces.
Hair Net P 10.00 10 units
A piece of fine mesh fabric for confining the hair.
Liquefied Petroleum Gas (LPG) (50 kgs)
Flammable mixtures of hydrocarbon gases used as fuel P 4,890.00 1 unit
in heating appliances, cooking equipment, and vehicles.
This will be used for the oven.
Fluorescent Lamp (23 watts)
A usually tubular electric lamp having a coating of
fluorescent material on its inner surface and containing P 145.00 4 units
mercury vapor whose bombardment by electrons from
the cathode provides ultraviolet light which causes the
material to emit visible light.
Oven Mitts
A thick cloth pad or glove used to protect hands from P 70.00 4 pairs
heat when removing the pan from the oven.
Pail
A usually round container with a handle. P 100.00 2 units
Trash Can 2 units
A container that holds materials that have been thrown P 200.00
away.

TABLE 21. FURNITURE AND FIXTURES


Furniture and Fixtures Cost per Unit Quantit Useful Life
(Description) y
Display Case P 5,500.00 2 units 15 years
A cabinet with one or often more transparent
glass surfaces, used to display ready-to-sell
products.
Cabinet P 9,595.00 1 unit 15 years
A piece of furniture with shelves, drawers, etc.,
for holding or displaying items.
Chairs P 1,899.00 5 units 10 years
A separate seat for one person, typically with a
back and four legs.
Computer P 10,850.00 1 set 5 years
An electronic device that stores and manipulates
information. It is able to store a program and
retrieve information from its memory.
Office Table P 5,700.00 1 unit 10 years
A piece of furniture that often has drawers.
Printer (with scanner and photocopier) P 7,595.00 1 unit 5 years
A device that accepts text and graphic output
from a computer and transfers the information to
paper, usually to standard size sheets of paper.

TABLE 22. OFFICE SUPPLIES


Office Supplies Cost per unit Quantity
(Description)
Ball Pens P 6.00 20 units
A pen that dispenses ink over a metal ball at its point.
Bond Paper P 125.00 1 ream
Durable, strong, and opaque paper used for writing, typing,
printing, and photocopying, it is well suited for office
stationery by being free from fuzz and having good finish.
Journal Ledger P 45.00 20 units
A complete record of financial transactions over the life of a
company. The ledger holds account information that is needed
to prepare financial statements.
Pencil P 4.00 5 units
An instrument for writing or drawing, consisting of a thin
stick of graphite or a similar substance enclosed in a long thin
piece of wood or fixed in a metal or plastic case.
Scissors P 78.00 2 units
A cutting device consisting of two blades laid one on top of
the other and fastened in the middle.
Scotch Tape Dispenser P 475.00 3 units
A transparent adhesive tape used for sealing, attaching or
mending.
Staple Wire (No. 35) P 36.00 8 boxes
A short thin wire with bent ends that is punched through
papers and squeezed to hold them together or punched
through thin material to fasten it to a surface
Voucher P 15.00 50 pads
A small printed piece of paper that entitles the holder to a
discount or that may be exchanged for goods or services.

F. BUILDING AND FACILITIES


The production site will be located at Roman Ayson Rd., Brgy. Campo Filipino, Baguio City. It is
a good place of production because it is near from Baguio City Market where we can easily get or
purchase direct materials. Also, it is good enough for starting a small enterprise. It is primarily composed
of production area and office area wherein the whole process of manufacturing up to the packaging of the
product will be done.
The plant layout will consist of the manufacturing area of the product. It is divided to a kitchen,
mixing area, cooling area, packaging area and storage for the baking tools, raw materials and finished
products. There is also an office to process the orders and do the necessary paper works for the business
and a toilet for the convenience of the employees.
G. LOCATION/ ROAD MAP

H. FLOOR PLAN

8 meters

2 meters
I. PLANT LAYOUT
The layout of the plant shows the arrangement of equipment and areas of manufacturing the
product. Their arrangement is positioned in such a way that it maximizes space in consideration with its
proper utilization. It also considers the minimization of cost to be incurred. Though the proponents
considered the least cost of the enterprise, they assure the quality product to be manufactured. The
production site is where the raw materials and supplies will be placed.
J. RAW MATERIALS
Our main Ingredients are squash, carrot and malunggay leaves. They give essential nutrients that
are needed to our body. To add taste to the product, brown sugar as well as butter is also used as
ingredients. The squash, carrot and malunggay leaves will be purchased from a direct supplier at Baguio
City Public Market.
TABLE 23. RAW MATERIALS
Raw Materials (Description) Price per Quantity per
unit production
Squash P40.00/kilo 3 kgs.
Squash is a widespread crop plant that occasionally
escapes into the wild. This annual vine originated in
South America, where it was first cultivated, and quickly
spread to other areas of the world. Its fruits are very
variable in color, shape, and texture.
Carrot P50.00/kilo 1.5 kgs
Carrots are one of the most widely used and enjoyed
vegetables in the world, partly because they grow
relatively easily, and are very versatile in a number of
dishes and cultural cuisines. Carrots are scientifically
classified as Daucus carota, and it is categorized as a
root vegetable.
Malunggay leaves P5.00/small 2 small
Malunggay is a plant that grows in the tropical climates bundle bundles
such as the Philippines, India and Africa. Malunggay is
widely used as vegetable ingredient in cooking, as herbal
medicine for a number of illness and other practical uses.

Flour (all purpose) P50.00 4.08 kgs.


Flour is a powder made from uncooked cereal grains or
others seeds or roots. There are various types of flour:
all-purpose flour, bread flour, wheat flour, cake flour,
pastry flour and high-gluten flour. For baking cookies,
the most commonly used type is the all-purpose flour.
Using other types of flour would result to a different
texture of the cookie.
Eggs (medium) P 5.00 1 dozen
Eggs play an important role in everything from cakes
and cookies to meringues and pastry cream they
create structure and stability within a batter, they help
thicken and emulsify sauces and custards, they add
moisture to cakes and other baked goods, and can even
act as glue or glaze.
Recipes that use just the yolk of an egg typically do so
for the yolk's fat content and emulsifying abilities
aiding in an even distribution of liquid and fats
throughout a recipe for smooth batters, satiny custards,
and creamy curds.
Brown sugar P21.00 3 kgs.
Brown sugar is a sucrose sugar product with a distinctive
brown color due to the presence of molasses. It is either
an unrefined or partially refined soft sugar consisting of
sugar crystals with some residual molasses content
(natural brown sugar), or it is produced by the addition
of molasses to refined white sugar (commercial brown
sugar).
Butter 60.51 337.5 grams
Butter is a solid dairy product made by churning fresh or
fermented cream or milk, to separate the butterfat from
the buttermilk. It is generally used as a spread on plain or
toasted bread products and a condiment on cooked
vegetables, as well as in cooking. Butter consists of
butterfat, milk proteins and water.

Baking powder P 207 7.5 grams


Baking Powder is a leavening agent that consists of a
combination of baking soda, cream of tartar, and a
moisture absorber (like cornstarch). It has the action of
yeast, but it acts much more quickly. It's used in batters
where there is no acid present, such as many baked
goods: cookies, cakes, pastries, pies, quick bread, etc.

K. UTILITIES
1. Electricity
In order for the enterprise to operate, it needs electricity for the operation of equipment in the
manufacturing of the product and for lighting the area. The electricity that will be used in the enterprise
will be supplied by the Benguet Electric Cooperative (BENECO).
TABLE 24. COMPUTATION FOR THE MONTHLY BILL

Power
Hours Days Total Total
Equipment Quantity Consumptio KWH
Used Used used KWH
n (Watts)
Light bulb 5 20 8 24 19,200 1,000 19
Electric mixer 2 250 4 24 48,000 1,000 48
Refrigerator 1 120 24 30 86,400 1,000 86
Total KWH - - - - - - 153
Multiply by:
- - - - - - 6.91
Commercial Rate
Monthly Bill - - - - - - 1,056.66

2. Water
Water is very important in the operation of the enterprise, it is needed by the enterprise in their
main operation because it is used for washing the raw materials, equipment to be utilized, and for the
maintenance of cleanliness of the kitchen or the production area and as well as the comfort room. The
water needed will be supplied by the Baguio Water District (BWD). The average consumption of the
enterprise per cubic meter will be 10. As a commercial business, the enterprise will pay a minimum
amount of Php. 555.00 per month.
L. LABOR REQUIREMENT
The enterprise needs 3 workers in order to operate and there are requirements that the applicants
are needed to meet to be qualified as an employee. The employee will be working together to achieve the
enterprises goals and objectives. The daily wage will be Php 285.00 for each employee.
M. WASTE DISPOSAL
V-Co Enterprise will comply with R.A. 9003 known as the Ecological Solid Waste Act of 200 by
putting four trash bins. One is for the disposal of biodegradable waste and the other for non-biodegradable
waste. Every day, before the closing time of the plant, one employee will be responsible in cleaning the
working areas and prepare the garbage for the scheduled day of collecting the garbage which is every
Monday. The employees will have a schedule on who take charge for the cleanliness of the production
area.
N. PRODUCTION COST
The estimated cost per unit of V-Co is based from the cost of raw materials used, direct labor
employed and other overhead costs.
TABLE 25. COMPUTATION FOR THE COST PER UNIT
Schedule Unit Cost Total Cost
1
Direct Material 2.08 184,174.40
Direct Labor 2 1.90 168,150.00
Factory Overhead 3 2.31 205,172.50
Total Manufacturing cost 557,496.90
Schedule 1: Direct Materials:

Raw Material Quantity Price Cost



Squash 3 kgs. 40.00 120.00
Carrots 1.5 kg. 50.00 75.00
2 small
Malunggay Leaves bundles 5.00 10.00
All-purpose Flour 4.08 kgs. 50.00 204.00
Brown Sugar 3 kgs. 21.00 63.00
Baking Powder 7.5 grams 207.00 1.55
Eggs 12 pieces 5.00 60.00
Butter 337.5 grams 60.51 90.77
Total Direct Materials- Daily 624.32
184,174.4
Annual Direct Materials (Normal Capacity) 0

Schedule 2: Direct Labor

Salary per day of employees 285.00


Multiply by : Number of Employees 2
Total Direct Labor Daily 570.00
Annual Direct Labor 168,150.00

Schedule 3: Factory overhead

Factory overhead Cost


Utilities expense:
Electricity 792.50
Water 416.25
Rent 7,500.00
Total utilities expense 8,708.75
Depreciation expense 573.33
Indirect Materials 210.00
Indirect Labor 7,200.00
Total Overhead 16,692.08
Divide by: No. of Working
Days in a Month 24
Daily Factory Overhead 695.50
205,172.5
Annual Factory Overhead 0
CHAPTER IV
FINANCIAL STUDY
Financial feasibility study is a financial aspect to know whether the project is attainable after
considering its total cost and possible revenues. It ensures that there was enough revenue on reserve to
cover all the cost. It also considers many things such as: start-up capital, expenses, investor income and
disbursements.

The project studies consist of the skillful coordination of the information on all the factors in the
form of the financial projections. It covers all the factors that are pertinent to an intended venture having
established the existence of a sample market and the feasibility of the production facilities to supply this
market.

This chapter requires the preparation of financial statements such as Comprehensive Income
Statement, Statement of Changes in Partner's Equity, Statement of Financial Position, and the Statement
of Cash Flow and its projections for the next 5 years. Certain financial analysis tools were also prepared
to help in the assessment of the project's profitability and its capacity to continue operations.

MAJOR ASSUMPTIONS

1. Income Statement

a) Sales
In 2018, the first year of operation of V-Co, a total of 88,500 pieces (100 packs) of
Squash-carrot-malunggay cookies will be produced based on normal capacity of 295 days. All
sales transactions will be in cash basis. Thus, there will be no Accounts Receivables. There will
be a 15% increase in selling price based on the previous selling price for the next five years.

b) Cost of Goods Sold

Direct Materials
All purchases are purely cash transactions and from VATregistered suppliers. The
suppliers do not accept returns and allowances, thus, no purchase returns and allowances shall be
considered. Ending Raw Materials Inventory shall be 5 days worth (5%) of the total purchases.
There will be an increase of 4% in the production every year. Selling prices of raw materials used
will increase by 1.5% every year due to estimated annual inflation rate.

Direct Labor
There will be 3 employees who will be paid a basic salary of P285/day. Salaries of the
bakers will increase by 1.5% every year due to estimated annual inflation rate.

Factory Overhead

Indirect Materials
The total factory supplies are bought annually and are expensed outright thus no unused
portion shall be carried over for the next year. Selling prices of factory tools and supplies will
increase by 1.5% every year due to estimated annual inflation rate.

Indirect Labor
There will be one production manager with a basic salary of P 7, 200/ month. Such
salaries will increase by 1.5% annually due to estimated inflation rate.

Depreciation Expense-Factory Equipment


The straight-line method will be used in computing annual depreciation expense.

Rent Expense
Monthly rent expense will increase by 1.5% every year based on previous monthly rate
due to estimated annual inflation rate and 75% will be allocated to Factory Overhead and the
remaining 25% will be allocated to General or administrative expense.
Utilities Expense
Rates will increase by 1.5% every year due to estimated annual inflation rate. 75% of
total utilities expense will be allocated to factory overhead.

c) Operating Expenses

Rent Expense-Office
25% of the annual rent expense will be allocated to general or administrative expense.

Utilities Expense-Office
25% of total utilities expense will be allocated to general or administrative expense.

Office Tools Expense


Office tools selling prices will be increase by 1.5% every year due to estimated annual
inflation rate.

Office Supplies Expense


Office suppliesselling prices will increase by 1.5% every year due to estimated annual
inflation rate.

Pre-operating Costs
One-time costs are incurred like some taxes, licenses fees, and organizational expenses.

Advertising Expense
The annual advertising expense of 5,000 is composed of tarpaulins and flyers.

Depreciation Expense-Furniture and Fixtures


The straight-line method will be used in computing annual depreciation expense.

Employee Benefits-Selling and Administrative


All employees of V-Co will be entitled to 13th month pay, equivalent to a one-month
basic salary. All employees are assumed to be single.

2. Balance Sheet

a) Assets
Current Assets

Cash
Cash and Cash Equivalent comprises of cash on hand and cash in bank. Cash in bank is
equal to the excess of partners' investment over the project cost; annual additional investment
will depend on the amount of cash on hand to be left. The amount of Cash on Hand must be at
least P 15,000 to P 25,000. Cash in bank will earn 0.25% annual interest income based on total
investment.

Raw Materials Inventory


There will be no Work-In Process Inventories maintained in the books of V-Co.
Therefore, number of squash-carrot-malunggay cookies produced yearly will be the same as the
number of squash-carrot-malunggay sold yearly. An ending raw materials inventory good for 3
days shall be maintained.
Prepaid Expenses
The prepaid expenses comprises of prepaid rent of P 20,000.00 due to lessor's policy of
two months' worth of advance rent payment, unused factory and office tools, and office supplies
of 5% of their total purchases.

Noncurrent Assets

Manufacturing Equipment
Balance of account will be net of accumulated depreciation.

Furniture and Fixtures


Balance of account will be net of accumulated depreciation.

b) Liabilities

Current Liabilities

SSS Payable ,PAG-IBIG Payable, PhilHealth Payable


SSS, PAG-IBIG and PhilHealth withheld from the employee's basic salary will be
remitted monthly. Ending balances of contributionspayables will comprise of employee benefits
for the month of December of the current year (due to monthly remittance of said contributions).

Withholding Tax Payable


Ending balance will comprise of withholding tax due for the month of December of the
current year (due to monthly remittance of said tax). The salary of bakers is within the Minimum
Wage Rate and no other compensation benefits will be given to employees, thus, no income tax
shall be withheld because compensation income of minimum wage earner is tax-exempt as
provided by the Tax Code. Withholding tax payable will also include the 10% final tax on
partners' share in the net income.

Income Tax Payable


The general co-partnership is subject to regular corporate income tax of 30% based on the
net taxable income. Ending balance will comprise of income tax due for the current year (due to
annual remittance of said tax).

c) Partners Capital
Each partner will initially be investing P 250,000.00 in cash and no subsequent
investments, in cash or in kind, will occur. Increase in a partners capital will only be due to share
in the annual net income after tax of the business. The share of net income of the partners is
subject to 10% final tax. Annual drawings of each partner will be 20% of the partners share in
the annual net income after tax of the business.

V-Co
Schedule of Project Cost

Schedule 1: Manufacturing Equipment


Unit Cost Quantity Total Cost
Baker's Table 6,000.00 1 Php 6,000.00
Cooling Rack 2,500.00 2 5,000.00
Freezer 17,950.00 1 17,950.00
Cooking Oven 68,000.00 1 68,000.00
Liquified Petroleum Gas (LPG) 3,000.00 1 3,000.00
Total Manufacturing Equipment Php 99,950.00

Schedule 2: Factory Tools


Unit Cost Quantity Total Cost
Electric Mixers 899.00 4 Php 3,596.00
Dough Cutter 76.00 4 304.00
Egg Beaters/ Whisk 120.00 4 480.00
Flour Sifter 1,499.00 2 2,998.00
Mixing Bowls 349.00 2 698.00
Bowl Scrapers 63.00 4 252.00
Baking Pan 20.00 20 400.00
Sheet Pans 190.00 4 760.00
Factory Tools 9,488.00
Less: Input Vat 1,138.56
Total Factory Tools Php 8,349.44

Schedule 3: Office Tools


Unit Cost Quantity Total Cost
Calculator 500.00 2 Php 1,000.00
Telephone 700.00 1 700.00
Stapler 100.00 2 200.00
Wall Clocks 300.00 2 600.00
Total Office Tools Php 2,500.00
Schedule 4: Factory Supplies
Unit Cost Quantity Total Cost

Apron 60.00 4 Php 240.00

Basin 100.00 2 200.00

Brooms 65.00 2 130.00

Dish Towel 7.00 5 35.00

Dishwashing Liquid 80.00 20 1,600.00

Dishwashing Sponge 15.00 5 75.00

Dustpan 40.00 2 80.00

Floor Mop 100.00 2 200.00

Hair Net 10.00 10 100.00

Flourescent Lamp (23 Watts) 145.00 4 580.00

Oven Mitts 70.00 4 280.00

Pail 100.00 2 200.00

Trash Can 200.00 2 400.00


Factory Supplies Php 4,120.00
Less: Input Tax 494.40
Total Factory Supplies Php 3,625.60

Schedule 5: Furnitures and Fixtures


Unit Cost Quantity Total Cost
Display Case 5,500.00 2 Php 11,000.00
Cabinet 9,595.00 1 9,595.00
Chairs 1,899.00 5 9,495.00
Computer 10,850.00 1 10,850.00
Office Table 5,700.00 1 5,700.00
Printer 7,595.00 1 7,595.00
Total Furnitures and Fixtures Php 54,235.00

Schedule 6: Office Supplies


Office Supplies Unit Cost Quantity Total Cost
Ball Pens 6.00 20 Php 120.00
Bond Paper 125.00 1 125.00
Journal Ledger 45.00 20 900.00
Pencil 4.00 5 20.00
Scissors 78.00 2 156.00
Scotch Tape Dispenser 475.00 3 1,425.00
Staple Wire 36.00 8 288.00
Voucher 15.00 50 750.00
Total Office Supplies Php 3,784.00

Schedule 7: Organizational Cost


Total Cost
Print Php 600.00
Photocopy 300.00
Book Bind 1,000.00
Transportation 100.00
Product Test 500.00
Total Organizational Cost Php 2,500.00
Schedule 8: Raw
Materials
Annual Materials Php 170,177.15
Divided by: 4
Raw Materials Needed per Quarter Php 42,544.29

Schedule 9: Cost of Labor


Direct Labor Php 42,750.00
Indirect Labor 26,250.00
Salaries-Administrative 21,600.00
Cost of Labor Php 69,000.00

Schedule 10: Unexpected Costs (1% of Actual Costs)


Total Manufacturing Equipment Php 99,950.00
Total Factory Tools 8,349.44
Total Office Tools 2,500.00
Total Factory Supplies 3,625.60
Furniture and Fixtures 542.35
Total Office Supplies 3,784.00
Total Organizational Cost 2,500.00
Raw Materials Requirement(1st Quarter) 42,544.29
Cost of Labor 69,000.00
Pre-operating Advertising Expenses 5,000.00
Total Actual Costs Php 237,795.68
Multiply by: Percentage 1%
Unexpected Costs Php 2,377.96

Schedule 11: Pre-operating Advertising Expenses


Cost per Unit 0
Multiply by: Number of Units to be Produced 200
Total 0
Flyers 2,000.00
Tarpaulins 3,000.00
Pre-operations Advertising expense Php 5,000.00

Schedule 12: Utilities Expense


Electricity Expense Php 2,978.18
Water expense 1,248.75
Communication Expense 3,000.00
Total Utilities Expense Php 7,226.93

Initial Working Capital Requirements


Partners Cash Investment

NAME AMOUNT
Fangon, Karl Marion V. 250,000.00
Espejo, Fenella Mae E. 250,000.00
Fetalco, Dannilyn B. 250,000.00
Lucero, Agnes A. 250,000.00
Padilla, Rhoby Lye V. 250,000.00
TOTAL Php 1,250,000.00

The partners opted to contribute cash as the source of funds in establishing V-Co. The cash
investments of the partners would be coming from their personal savings, and various sources of
compensation and income. A part of their agreement would be the equal division of the net income after
tax generated by the business. There would be no non-cash contribution and additional cash investments
from the partners during the first 5 years of operations.
FINANCIAL STATEMENTS

V-Co Company
Comparative Statements of Financial Position
As of Years Ended December 31, 2018, 2019, 2020, 2021 and 2022
Note 2018 2019 2020 2021 2022
ASSETS
Currents Assets:
Cash 18 Php 1,207,887.09 Php 1,388,980.11 Php 1,634,688.20 Php 1,957,815.07 Php 2,368,876.15
Raw Materials
Sc. 3
Inventory 8,508.86 9,500.14 10,606.91 11,842.61 13,222.27
Prepaid Expenses 9 20,731.67 20,758.36 20,770.52 20,782.11 20,793.85
Total Current Assets Php 1,237,127.62 Php 1,419,238.60 Php 1,666,065.62 Php 1,990,439.79 Php 2,402,892.27

Non-Current Assets:
Manufacturing
10
Equipment 92,520.00 85,090.00 77,660.00 70,230.00 62,800.00
Furnitures and
11
Fixtures 47,653.50 41,072.00 34,490.50 27,909.00 21,327.50
Total Non-Current
Assets Php 140,173.50 Php 126,162.00 Php 112,150.50 Php 98,139.00 Php 84,127.50
TOTAL ASSETS Php 1,377,301.12 Php 1,545,400.60 Php 1,778,216.12 Php 2,088,578.79 Php 2,487,019.77
LIABILITIES AND PARTNER'S CAPITAL
Liabilities:
SSS Payable 12 Php 3,370.00 Php 3,370.00 Php 3,505.00 Php 3,505.00 Php 3,530.00
PhilHealth Payable 13 800.00 800.00 800.00 800.00 800.00
PAG-IBIG Payable 14 800.00 800.00 800.00 800.00 800.00
Withholding Tax Payable 15 1,885.36 2,556.81 3,267.62 4,088.60 5,015.65
Income Tax Payable 17 42,015.96 73,061.86 106,500.55 145,131.01 189,303.47
VAT Payable 16 22,236.69 25,338.07 28,863.81 32,871.65 37,427.18
Utilities Payable 19 602.24 609.72 617.30 625.00 632.81
Total Current Liabilities Php 48,871.32 Php 80,588.67 Php 114,873.17 Php 154,324.61 Php 199,449.12
Total Non-Current Php
Liabilities Php - Php - Php - Php - -
TOTAL LIABILITIES Php 48,871.32 Php 80,588.67 Php 114,873.17 Php 154,324.61 Php 199,449.12

Partner's Capital
Php Php Php Php
Fangon, Capital Php 265,685.96 292,962.39 332,722.59 386,904.84 457,578.13
Espejo, Capital 265,685.96 292,962.39 332,722.59 386,904.84 457,578.13
Fetalco, Capital 265,685.96 292,962.39 332,722.59 386,904.84 457,578.13
Lucero, Capital 265,685.96 292,962.39 332,722.59 386,904.84 457,578.13
Padilla, Capital 265,685.96 292,962.39 332,722.59 386,904.84 457,578.13
Total Partner's Capital Php 1,328,429.80 Php 1,464,811.93 Php 1,663,612.96 Php 1,934,524.18 Php 2,287,890.65
TOTAL LIABILITIES AND
PARTNER'S CAPITAL Php 1,377,301.12 Php 1,545,400.60 Php 1,778,486.12 Php 2,088,848.79 Php 2,487,339.77
V-Co Company
Comparative Statements of Comprehensive Income
For the Years Ended December 31, 2018, 2019, 2020, 2021 and 2022

Note 2018 2019 2020 2021 2022


Net Sales 5 Php 948,214.29 Php 1,074,326.79 Php 1,217,212.25 Php 1,379,101.48 Php 1,562,521.97
Less: Cost of Goods Sold 6 622,469.45 656,240.04 685,413.38 716,592.93 750,803.58
Gross Profit 7 325,744.84 418,086.74 531,798.87 662,508.55 811,718.40
Less: Operating Expenses 185,691.63 174,547.22 176,797.04 178,738.50 180,706.84
Operating Income 140,053.21 243,539.53 355,001.83 483,770.05 631,011.55
Interest Income 8 - - - - -
Earnings Before Income Tax 140,053.21 243,539.53 355,001.83 483,770.05 631,011.55
Less: Corporate Income Tax 42,015.96 73,061.86 106,500.55 145,131.01 189,303.47
Net Income Php 98,037.24 Php 170,477.67 Php 248,501.28 Php 338,639.03 Php 441,708.09
V-Co Company
Comparative Statements of Cash Flows
For the Years Ended December 31, 2018, 2019, 2020, 2021 and 2022

2018 2019 2020 2021 2022


Fangon, Capital Beginning Php 250,000.00 Php 265,685.96 Php 292,962.39 Php 332,722.59 Php 386,904.84
Share in Net Income 19,607.45 34,095.53 49,700.26 67,727.81 88,341.62
Total 269,607.45 299,781.49 342,662.64 400,450.40 475,246.45
Less: Drawings 3,921.49 6,819.11 9,940.05 13,545.56 17,668.32
Fangon, Capital End Php 265,685.96 Php 292,962.39 Php 332,722.59 Php 386,904.84 Php 457,578.13

Espejo, Capital Beginning Php 250,000.00 Php 265,685.96 Php 292,962.39 Php 332,722.59 Php 386,904.84
Share in Net Income 19,607.45 34,095.53 49,700.26 67,727.81 88,341.62
Total 269,607.45 299,781.49 342,662.64 400,450.40 475,246.45
Less: Drawings 3,921.49 6,819.11 9,940.05 13,545.56 17,668.32
Espejo, Capital End Php 265,685.96 Php 292,962.39 Php 332,722.59 Php 386,904.84 Php 457,578.13

Fetalco, Capital Beginning Php 250,000.00 Php 265,685.96 Php 292,962.39 Php 332,722.59 Php 386,904.84
Share in Net Income 19,607.45 34,095.53 49,700.26 67,727.81 88,341.62
Total 269,607.45 299,781.49 342,662.64 400,450.40 475,246.45
Less: Drawings 3,921.49 6,819.11 9,940.05 13,545.56 17,668.32
Fetalco, Capital End Php 265,685.96 Php 292,962.39 Php 332,722.59 Php 386,904.84 Php 457,578.13

Lucero, Capital Beginning Php 250,000.00 Php 265,685.96 Php 292,962.39 Php 332,722.59 Php 386,904.84
Share in Net Income 19,607.45 34,095.53 49,700.26 67,727.81 88,341.62
Total 269,607.45 299,781.49 342,662.64 400,450.40 475,246.45
Less: Drawings 3,921.49 6,819.11 9,940.05 13,545.56 17,668.32
Lucero, Capital End Php 265,685.96 Php 292,962.39 Php 332,722.59 Php 386,904.84 Php 457,578.13

Padilla, Capital Beginning Php 250,000.00 Php 265,685.96 Php 292,962.39 Php 332,722.59 Php 386,904.84
Share in Net Income 19,607.45 34,095.53 49,700.26 67,727.81 88,341.62
Total 269,607.45 299,781.49 342,662.64 400,450.40 475,246.45
Less: Drawings 3,921.49 6,819.11 9,940.05 13,545.56 17,668.32
Padilla, Capital End Php 265,685.96 Php 292,962.39 Php 332,722.59 Php 386,904.84 Php 457,578.13
V-Co Company
Comparative Statements of Cash Flows
For the Years Ended December 31, 2018, 2019, 2020, 2021 and 2022

2018 2019 2020 2021 2022


Net Income 98,037.24 170,477.67 248,501.28 338,639.03 441,708.09
Depreciation Expense 14,011.50 14,011.50 14,011.50 14,011.50 14,011.50
Adjustments provided by
Operating Activities:
Increase in Materials Inventory (8,508.86) (991.28) (1,106.77) (1,235.70) (1,379.66)
Increase in Prepaid Expenses (20,731.67) (26.69) (12.16) (11.60) (11.73)
Increase in SSS Payable 3,370.00 - (135.00) - (25.00)
Increase in PhilHealth Payable 800.00 - - - -
Increase in PAG-IBIG Payable 800.00 - - - -
Increase in Withholding Tax 1,885.36 671.45 710.80 820.98 927.06
Increase in Income Tax Payable 42,015.96 31,045.90 33,438.69 38,630.47 44,172.45
Increase in VAT Payable 22,236.69 3,101.38 3,525.74 4,007.84 4,555.53
Increase in Utilities Payable 602.24 7.47 7.58 7.70 7.81
Net Cash Provided by
Operating Activities 131,679.54 215,188.55 295,408.35 390,854.67 499,402.70

Acquisition of Fixed Asset (154,185.00)


Net Cash Provided (Used) by
Investing Activities (154,185.00) - - - -

Capital Contributions 1,250,000.00 - - - -


Additional Investments - - - - -
Less: Withdrawals 19,607.45 34,095.53 49,700.26 67,727.81 88,341.62
Net Cash Provided (Used) by
Financing Activities 1,230,392.55 (34,095.53) (49,700.26) (67,727.81) (88,341.62)
Net Cash Flow 1,207,887.09 181,093.02 245,708.09 323,126.87 411,061.08
Cash, Beginning - 1,207,887.09 1,388,980.11 1,634,688.20 1,957,815.07
CASH, ENDING 1,207,887.09 1,388,980.11 1,634,688.20 1,957,815.07 2,368,876.15
NOTES TO FINANCIAL STATEMENTS

Note 1- STATEMENT OF COMPLIANCE

The financial statements have been prepared in compliance with the Philippine Financial Reporting
Standards for Small and Medium-sized Entities and rules and regulations of Philippine Securities and
Exchange Commission.

The accounting policies adopted in the preparation of financial statements have been applied on a
consistent basis.

Note 2- SIGNIFICANT ACCOUNTING POLICIES


Cash- Cash is comprised of cash on hand cash in bank with an annual interest of 0.25%.

Raw Materials Inventories- Raw material inventories shall comprise all costs of purchase and other costs
incurred bringing the inventories to their present location and condition.

Prepaid Expense- Prepaid expense represents advance payment initially recorded as asset when
purchased. The portion of assets that have been used or expired during the period is charged to expense.

Property and Equipment- Property and equipment are recorded at cost. The straight line method is used in
recording depreciation on the basis of the estimated useful life of the assets.

SSS, PhilHealth and PAG-IBIG Payable- SSS, PhilHealth and PAG_IBIG contributions are recorded at
cost or its face value.

Withholding tax payable- Withholding tax payable is measured at the amount expected to be paid by the
enterprise. It resulted due to withholding of applicable tax on compensation, fees, and payment to
suppliers.

Revenue recognition- Revenue comprises the fair value of the consideration received for the sale of goods
in the ordinary course of the business. Revenue is shown net of sales returns and discounts.

The enterprise recognized revenue when the amount of revenue can be reliably measured and it is
probable the future economic benefits will flow to the entity.

Employee benefit obligation- The enterprise provides short term benefits to its employees in the form of
salaries and wages, bonuses, contribution to SSS / PHIC / HMDF, and other short term employee benefits
are part of cost of services and operating expenses.

Judgments- The financial statements have been prepared in compliance with PFRS for SMEs. The
enterprise qualifies as Small and Medium-sized Entities. The preparations of financial statements are
based upon managements evaluation of relevant facts and circumstances as of the date of the financial
statements. Actual results could differ from such estimates. Judgments and estimate are continually
evaluated and are based on historical experience and other factors, including expectations of future events
that are believed to be reasonable.
Note 3- NATURE OF THE BUSINESS

V-Co is a partnership for trade or business. The objective of the business is to provide customers an
option and exceptional taste of their favorite snack.

Note 4 BASIS OF PREPARATION

The significant accounting policies that have been used in the preparation of these financial statements are
summarized below. The policies have been consistently applied to all years presented, unless otherwise
stated.
Note 5: Net Sales
2018 2019 2020 2021 2022
Annual Production of
Cookies (packs) 88,500 97,350 107,085 117,794 129,573
Multiply by: Selling Price 12.00 12.36 12.73 13.11 13.51
Gross Sales 1,062,000.00 1,203,246.00 1,363,277.72 1,544,593.65 1,750,024.61
Less: Value Added Tax 113,785.71 128,919.21 146,065.47 165,492.18 187,502.64
Net Sales Php 948,214.29 Php 1,074,326.79 Php 1,217,212.25 Php 1,379,101.48 Php 1,562,521.97

Note 6: Cost of Goods Sold


Schedule 2018 2019 2020 2021 2022
Php Php Php Php Php
1
Direct Materials 161,668.29 189,011.50 211,031.34 235,616.49 263,065.81
Direct Labor 4 171,000.00 173,565.00 176,168.48 178,811.00 181,493.17
Factory Overhead 5 289,801.16 293,663.54 298,213.56 302,165.43 306,244.60
Cost of Goods Sold Php 622,469.45 Php 656,240.04 Php 685,413.38 Php 716,592.93 Php 750,803.58

Note 7: Operating Expenses


Schedule 2018 2019 2020 2021 2022
Rent Expense- Php Php Php
11
Administrative Php 30,000.00 Php 30,300.00 30,603.00 30,909.03 31,218.12
Utilities-Administrative 13 7,226.93 7,316.60 7,407.62 7,500.00 7,593.77
Office Tools Expense 21 2,375.00 2,529.38 2,573.25 2,612.15 2,651.35
Office Supplies Expense 22 3,594.80 3,828.46 3,894.88 3,953.75 4,013.08
Salaries-Administrative 23 86,400.00 87,696.00 89,011.44 90,346.61 91,701.81
Employee Benefits-
24
Administrative 15,953.40 16,060.28 16,490.35 16,600.46 16,712.22
Depreciation Expense-
27
Furniture & Fixtures 6,581.50 6,581.50 6,581.50 6,581.50 6,581.50
Taxes and Licenses 28 11,660.00 8,235.00 8,235.00 8,235.00 8,235.00
Advertising Expense 29 19,400.00 12,000.00 12,000.00 12,000.00 12,000.00
Organizational Expenses 30 2,500.00 - - - -
TOTAL EXPENSES Php 185,691.63 Php 174,547.22 Php 176,797.04 Php 178,738.50 Php 180,706.84
Note 8: Interest Income
Schedul
e 2018 2019 2020 2021 2022
Cash in Bank Php - Php - Php - Php - Php -
Interest Rate 0% 0% 0% 0% 0%
Interest Income Php - Php - Php - Php - Php -

Note 9: Prepaid Expenses


Schedul
e 2018 2019 2020 2021 2022
Php Php Php Php Php
Prepaid Rent 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00
Unused Office Supplies 22 189.20 201.50 204.99 208.09 211.21
Unused Office Tools 21 125.00 133.13 135.43 137.48 139.54
Unused Factory Tools 417.47 423.73 430.09 436.54 443.09
Prepaid Expenses Php 20,731.67 Php 20,758.36 Php 20,770.52 Php 20,782.11 Php 20,793.85

Note 10: Manufacturing Equipment


Schedul
e 2018 2019 2020 2021 2022
Php Php Php Php Php
Cost of Equipment 99,950.00 99,950.00 99,950.00 99,950.00 99,950.00
Less: Accumulated
10
Depreciation 7,430.00 14,860.00 22,290.00 29,720.00 37,150.00
Manufacturing Equipment Php 92,520.00 Php 85,090.00 Php 77,660.00 Php 70,230.00 Php 62,800.00

Note 11: Furniture and Fixtures


Schedul
e 2018 2019 2020 2021 2022
Php Php Php Php Php
Cost of Furniture and Fixtures 54,235.00 54,235.00 54,235.00 54,235.00 54,235.00
Less: Accumulated
27
Depreciation 6,581.50 13,163.00 19,744.50 26,326.00 32,907.50
Php Php Php Php Php
Furniture and Fixtures 47,653.50 41,072.00 34,490.50 27,909.00 21,327.50

Note 12: SSS Payable


Schedule 2018 2019 2020 2021 2022
Employer's Contribution 20 27,361.20 27,361.20 28,326.00 28,326.00 28,407.60
Employee's Contribution 20 13,078.80 13,078.80 13,734.00 13,734.00 13,952.40
SSS Payable Php 40,440.00 Php 40,440.00 Php 42,060.00 Php 42,060.00 Php 42,360.00

Note 13: PAG-IBIG Payable


Schedul
e 2018 2019 2020 2021 2022
Employer's Contribution 20 4,800.00 4,800.00 4,800.00 4,800.00 4,800.00
Employee's Contribution 20 4,800.00 4,800.00 4,800.00 4,800.00 4,800.00
PAG-IBIG Payable Php 9,600.00 Php 9,600.00 Php 9,600.00 Php 9,600.00 Php 9,600.00

Note 14: PhilHealth Payable


Schedul
e 2018 2019 2020 2021 2022
Employer's Contribution 20 4,800.00 4,800.00 4,800.00 4,800.00 4,800.00
Employee's Contribution 20 4,800.00 4,800.00 4,800.00 4,800.00 4,800.00
PhilHealth Payable Php 9,600.00 Php 9,600.00 Php 9,600.00 Php 9,600.00 Php 9,600.00

Note 15: Withholding Tax Payable


Schedul
e 2018 2019 2020 2021 2022
Final Tax on Partner's
Share in Net Income 9,803.72 17,047.77 24,850.13 33,863.90 44,170.81
Creditable Withholding
31
Tax of Employees 12,820.62 13,634.00 14,361.29 15,199.25 16,017.02
Annual Withholding Tax Payable Php 22,624.34 Php 30,681.76 Php 39,211.42 Php 49,063.15 Php 60,187.83
Monthly Withholding Tax Payable Php 1,885.36 Php 2,556.81 Php 3,267.62 Php 4,088.60 Php 5,015.65

Note 16: VAT Payable


Schedule 2018 2019 2020 2021 2022
Gross Sales Note 5 Php 1,062,000.00 Php 1,203,246.00 Php 1,363,277.72 Php 1,544,593.65 Php 1,750,024.61
Divided by: Rate 1.12 1.12 1.12 1.12 1.12
Vatable Sales 948,214.29 1,074,326.79 1,217,212.25 1,379,101.48 1,562,521.97
Multiply by: VAT Rate 12% 12% 12% 12% 12%
Output VAT 113,785.71 128,919.21 146,065.47 165,492.18 187,502.64
Input VAT 32 24,838.93 27,566.92 30,610.24 34,005.58 37,793.91
Annual VAT Payable Php 88,946.78 Php 101,352.29 Php 115,455.23 Php 131,486.60 Php 149,708.73
Quarterly VAT Payable Php 22,236.69 Php 25,338.07 Php 28,863.81 Php 32,871.65 Php 37,427.18

Note 17: Income Tax Payable


2018 2019 2020 2021 2022
Earnings Before Tax Php 140,053.21 Php 243,539.53 Php 355,001.83 Php 483,770.05 Php 631,011.55
Multiply by: Tax Rate 30% 30% 30% 30% 30%
Income Tax Payable Php 42,015.96 Php 73,061.86 Php 106,500.55 Php 145,131.01 Php 189,303.47

Note 18: Cash and Cash Equivalents


Schedule 2018 2019 2020 2021 2022
Cash on Hand
Cash in Bank 33 - - - - -
Cash and Cash Equivalents Php - Php - Php - Php - Php -

Note 19: Utilities Payable


Schedule 2018 2019 2020 2021 2022
Electricity Expense 14 Php 248.18 Php 251.90 Php 255.68 Php 259.52 Php 263.41
Water Expense 15 104.06 104.06 104.06 104.06 104.06
Communication Expense 16 250.00 253.75 257.56 261.42 265.34
Utilities Payable Php 602.24 Php 609.72 Php 617.30 Php 625.00 Php 632.81

Schedule 1: Direct
Materials
Schedul
e 2018 2019 2020 2021 2022
Raw Materials, Beginning - 8,508.86 9,500.14 10,606.91 11,842.61
Purchases 2 170,177.15 190,002.78 212,138.11 236,852.20 264,445.48
Raw Materials Available for Use 170,177.15 198,511.64 221,638.25 247,459.10 276,288.09
Less: Raw Materials, Ending 3 8,508.86 9,500.14 10,606.91 11,842.61 13,222.27
Direct Materials Php 161,668.29 Php 189,011.50 Php 211,031.34 Php 235,616.49 Php 263,065.81

Schedule 2: Purchases
2018 2019 2020 2021 2022
Squash 35,400.00 39,524.10 44,128.66 49,269.65 55,009.56
Carrots 22,125.00 24,702.56 27,580.41 30,793.53 34,380.98
Malunggay Leaves 2,950.00 3,293.68 3,677.39 4,105.80 4,584.13
All-purpose Flour 60,180.00 67,190.97 75,018.72 83,758.40 93,516.25
Brown Sugar 18,585.00 20,750.15 23,167.55 25,866.56 28,880.02
Baking Powder 457.25 510.52 570.00 636.40 710.54
Egg 17,700.00 19,762.05 22,064.33 24,634.82 27,504.78
Butter 26,777.15 29,896.69 33,379.65 37,268.38 41,610.15
Raw Materials Needed 184,174.40 205,630.72 229,586.70 256,333.55 286,196.40
Multiply by: Allowance for Shortage 105% 105% 105% 105% 105%
Total Purchases 193,383.12 215,912.25 241,066.03 269,150.22 300,506.22
Less: Input Vat 23,205.97 25,909.47 28,927.92 32,298.03 36,060.75
Net Purchases 170,177.15 190,002.78 212,138.11 236,852.20 264,445.48

Schedule 3: Raw Materials, Ending


Schedule 2018 2019 2020 2021 2022
Purchases 2 170,177.15 190,002.78 212,138.11 236,852.20 264,445.48
Multiply by: Rate 5% 5% 5% 5% 5%
Raw Materials, Ending Php 8,508.86 Php 9,500.14 Php 10,606.91 Php 11,842.61 Php 13,222.27

Schedule 4: Direct Labor


2018 2019 2020 2021 2022
Baker 1 85,500.00 86,782.50 88,084.24 89,405.50 90,746.58
Baker 2 85,500.00 86,782.50 88,084.24 89,405.50 90,746.58
Direct Labor Php 171,000.00 Php 173,565.00 Php 176,168.48 Php 178,811.00 Php 181,493.17

Schedule 5: Factory Overhead


Schedul
e 2018 2019 2020 2021 2022
Indirect Materials 6 11,557.57 11,730.93 11,906.90 12,085.50 12,266.78
Indirect Labor 9 105,000.00 106,575.00 108,173.63 109,796.23 111,443.17
Manufacturing Equipment-
Depreciation 10 7,430.00 7,430.00 7,430.00 7,430.00 7,430.00
Rent Expense-Factory 11 90,000.00 90,900.00 91,809.00 92,727.09 93,654.36
Repairs and Maintenance-
Factory 12 3,000.00 3,600.00 4,200.00 4,800.00 5,400.00
Utilities Expense-Factory 13 21,680.79 21,949.81 22,222.86 22,500.01 22,781.32
Employee Benefits-Factory 17
Overhead 51,132.80 51,477.80 52,471.18 52,826.60 53,268.96
Factory Overhead Php 289,801.16 Php 293,663.54 Php 298,213.56 Php 302,165.43 Php 306,244.60

Schedule 6: Indirect Materials


Schedule 2018 2019 2020 2021 2022
Factory Supplies Expense 8 Php 3,625.60 Php 3,679.98 Php 3,735.18 Php 3,791.21 Php 3,848.08
Factory Tools Expense 7 7,931.97 8,050.95 8,171.71 8,294.29 8,418.70
Indirect Materials Php 11,557.57 Php 11,730.93 Php 11,906.90 Php 12,085.50 Php 12,266.78

Schedule 7: Factory Tools Expense


2018 2019 2020 2021 2022
Electric Mixers Php 3,596.00 Php 3,649.94 Php 3,704.69 Php 3,760.26 Php 3,816.66
Dough Cutter 304.00 308.56 313.19 317.89 322.65
Egg Beaters/ Whisk 480.00 487.20 494.51 501.93 509.45
Flour Sifter 2,998.00 3,042.97 3,088.61 3,134.94 3,181.97
Mixing Bowls 698.00 708.47 719.10 729.88 740.83
Bowl Scrapers 252.00 255.78 259.62 263.51 267.46
Baking Pan 400.00 406.00 412.09 418.27 424.55
Sheet Pans 760.00 771.40 782.97 794.72 806.64
Factory Tools Php 9,488.00 Php 9,630.32 Php 9,774.77 Php 9,921.40 Php 10,070.22
Less: Input Tax 1,138.56 1,155.64 1,172.97 1,190.57 1,208.43
Total Factory Tools Php 8,349.44 Php 8,474.68 Php 8,601.80 Php 8,730.83 Php 8,861.79
Unused Factory Tools 417.47 423.73 430.09 436.54 443.09
Factory Tools Expense Php 7,931.97 Php 8,050.95 Php 8,171.71 Php 8,294.29 Php 8,418.70
Schedule 8: Factory Supplies Expense
2018 2019 2020 2021 2022
Apron Php 240.00 Php 243.60 Php 247.25 Php 250.96 Php 254.73
Basin 200.00 203.00 206.05 209.14 212.27
Brooms 130.00 131.95 133.93 135.94 137.98
Dish Towel 35.00 35.53 36.06 36.60 37.15
Dishwashing Liquid 1,600.00 1,624.00 1,648.36 1,673.09 1,698.18
Dishwashing Sponge 75.00 76.13 77.27 78.43 79.60
Dustpan 80.00 81.20 82.42 83.65 84.91
Floor Mop 200.00 203.00 206.05 209.14 212.27
Hair Net 100.00 101.50 103.02 104.57 106.14
Flourescent Lamp (23 Watts) 580.00 588.70 597.53 606.49 615.59
Oven Mitts 280.00 284.20 288.46 292.79 297.18
Pail 200.00 203.00 206.05 209.14 212.27
Trash Can 400.00 406.00 412.09 418.27 424.55
Factory Supplies 4,120.00 4,181.80 4,244.53 4,308.19 4,372.82
Less: Input Tax 494.40 501.82 509.34 516.98 524.74
Total Factory Supplies Php 3,625.60 Php 3,679.98 Php 3,735.18 Php 3,791.21 Php 3,848.08

Schedule 9: Indirect Labor


2018 2019 2020 2021 2022
Production Manager 105,000.00 106,575.00 108,173.63 109,796.23 111,443.17
Indirect Labor Php 105,000.00 Php 106,575.00 Php 108,173.63 Php 109,796.23 Php 111,443.17
Schedule 10: Depreciation Expense-Manufacturing Equipment
2018 2019 2020 2021 2022
Baker's Table Php 6,000.00 Php 6,000.00 Php 6,000.00 Php 6,000.00 Php 6,000.00
Divide by: Useful Life (in years) 10 10 10 10 10
Annual Depreciation Php 600.00 Php 600.00 Php 600.00 Php 600.00 Php 600.00
Cooling Rack 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00
Divide by: Useful Life (in years) 10 10 10 10 10
Annual Depreciation Php 500.00 Php 500.00 Php 500.00 Php 500.00 Php 500.00
Freezer 17,950.00 17,950.00 17,950.00 17,950.00 17,950.00
Divide by: Useful Life (in years) 15 15 15 15 15
Annual Depreciation Php 1,196.67 Php 1,196.67 Php 1,196.67 Php 1,196.67 Php 1,196.67
Cooking Oven 68,000.00 68,000.00 68,000.00 68,000.00 68,000.00
Divide by: Useful Life (in years) 15 15 15 15 15
Annual Depreciation Php 4,533.33 Php 4,533.33 Php 4,533.33 Php 4,533.33 Php 4,533.33
Liquified Petroleum Gas (LPG) 3,000.00 3,000.00 3,000.00 3,000.00 3,000.00
Divide by: Useful Life (in years) 5 5 5 5 5
Annual Depreciation Php 600.00 Php 600.00 Php 600.00 Php 600.00 Php 600.00
Depreciation Expense-
Manufacturing Equipment Php 7,430.00 Php 7,430.00 Php 7,430.00 Php 7,430.00 Php 7,430.00

Schedule 11: Rent Expense


2018 2019 2020 2021 2022
Monthly Rent Php 10,000.00 Php 10,100.00 Php 10,201.00 Php 10,303.01 Php 10,406.04
Multiply by: Number of
Months 12 12 12 12 12
Total Rent Expense Php 120,000.00 Php 121200 Php 122,412.00 Php 123,636.12 Php 124,872.48
Multiply by: Percentage of Used by
Factory 75% 75% 75% 75% 75%
Rent Expense-Factory Php 90,000.00 Php 90,900.00 Php 91,809.00 Php 92,727.09 Php 93,654.36
Rent Expense-Administrative Php 30,000.00 Php 30,300.00 Php 30,603.00 Php 30,909.03 Php 31,218.12

Schedule 12: Repairs and Maintenance


2018 2019 2020 2021 2022
Monthly Rate of Repairs and Maintenance Php 250.00 Php 300.00 Php 350.00 Php 400.00 Php 450.00
Multiply by: Number of Months 12 12 12 12 12
Total Repairs and Maintenance Php 3,000.00 Php 3,600.00 Php 4,200.00 Php 4,800.00 Php 5,400.00

Schedule 13: Utilities Expense


Schedul
e 2018 2019 2020 2021 2022
Electricity Expense 14 Php 11,912.72 Php 12,091.41 Php 12,272.79 Php 12,456.88 Php 12,643.73
Water Expense 15 4,995.00 4,995.00 4,995.00 4,995.00 4,995.00
Communication Expense 16 12,000.00 12,180.00 12,362.70 12,548.14 12,736.36
Total Utilities-Factory 21,680.79 21,949.81 22,222.86 22,500.01 22,781.32
Total Utilities-
Administrative Php 7,226.93 Php 7,316.60 Php 7,407.62 Php 7,500.00 Php 7,593.77

Schedule 14: Electricity Expense


Schedule 2018 2019 2020 2021 2022
Total Electricity Expense 14a Php 11,912.72 Php 12,091.41 Php 12,272.79 Php 12,456.88 Php 12,643.73
Multiply by: Percentage Used
by Factory 75% 75% 75% 75% 75%
Electricity Expense-Factory Php 8,934.54 Php 9,068.56 Php 9,204.59 Php 9,342.66 Php 9,482.80
Electricity Expense-
Administrative Php 2,978.18 Php 3,022.85 Php 3,068.20 Php 3,114.22 Php 3,160.93

Schedule 14a: Electricity Usage


Quantity Watts/Hour Hours/Day KW/Day KW/Year VC/KW Total
Light bulb 5 20 800 0.80 236.00 6.91 1,630.76
Electric mixer 2 250 1,500 1.50 442.50 6.91 3,057.68
Refrigerator 1 120 2,880 2.88 1,036.80 6.91 7,164.29
Total Variable Cost 11,852.72
Fixed Cost 60.00
Total Electricity Expense Php 11,912.72

Schedule 15: Water


Expense
2018 2019 2020 2021 2022
Monthly Consumption 416.25 416.25 416.25 416.25 416.25
Multiply by: Number of
Months 12 12 12 12 12
Total Water Expense 4,995.00 4,995.00 4,995.00 4,995.00 4,995.00
Multiply by: Percentage Used
by Factory 75% 75% 75% 75% 75%
Water Expense-Factory Php 3,746.25 Php 3,746.25 Php 3,746.25 Php 3,746.25 Php 3,746.25
Water Expense-Administrative Php 1,248.75 Php 1,248.75 Php 1,248.75 Php 1,248.75 Php 1,248.75

Schedule 16: Communication Expense


2018 2019 2020 2021 2022
Monthly Consumption 1,000.00 1,015.00 1,030.23 1,045.68 1,061.36
Multiply by: Number of
Months 12.00 12.00 12.00 12.00 12.00
Total Communication 12,000.00 12,180.00 12,362.70 12,548.14 12,736.36
Expense
Multiply by: Percentage
Used by Factory 75% 75% 75% 75% 75%
Communication Expense-Factory Php 9,000.00 Php 9,135.00 Php 9,272.03 Php 9,411.11 Php 9,552.27
Communication Expense-Administrative Php 3,000.00 Php 3,045.00 Php 3,090.68 Php 3,137.04 Php 3,184.09

Schedule 17: Employee Benefits-Factory Overhead


Schedule 2018 2019 2020 2021 2022
13th Month Pay 18 Php 23,000.00 Php 23,345.00 Php 23,695.18 Php 24,050.60 Php 24,411.36
SSS, PhilHealth and PAG-
IBIG Employer
Contributions 19 28,132.80 28,132.80 28,776.00 28,776.00 28,857.60
Total Employee Benefits-
Factory Overhead Php 51,132.80 Php 51,477.80 Php 52,471.18 Php 52,826.60 Php 53,268.96

Schedule 18: 13th Month


Pay
2018 2019 2020 2021 2022
Baker 1 Php 7,125.00 Php 7,231.88 Php 7,340.35 Php 7,450.46 Php 7,562.22
Baker 2 7125 7,231.88 7,340.35 7,450.46 7,562.22
Production Manager 8750 8,881.25 9,014.47 9,149.69 9,286.93
Total 13th Month Pay Php 23,000.00 Php 23,345.00 Php 23,695.18 Php 24,050.60 Php 24,411.36

Schedule 19: SSS, PhilHealth, PAG-IBIG Employer Contributions


Schedule 2018 2019 2020 2021 2022
SSS 20 20,932.80 20,932.80 21,576.00 21,576.00 21,657.60
PhilHealth 20 3,600.00 3,600.00 3,600.00 3,600.00 3,600.00
PAG-IBIG 20 3,600.00 3,600.00 3,600.00 3,600.00 3,600.00
Total SSS, PhilHealth,
PAG-IBIG Employer
Contributions Php 28,132.80 Php 28,132.80 Php 28,776.00 Php 28,776.00 Php 28,857.60

Schedule 20: SSS, PhilHealth, PAG-IBIG Contributions


For the Year Ended December 31, 2018
Monthly
Position SSS PhilHealth PAG-IBIG
Salary
EC/E
ER EE Total ER EE Total ER EE Total
R
Baker 1 7,125.00 10.00 525.70 254.30 790.00 100.00 100.00 200.00 100.00 100.00 200.00
Baker 1 7,125.00 10.00 525.70 254.30 790.00 100.00 100.00 200.00 100.00 100.00 200.00
Total 14,250.00 20.00 1,051.40 508.60 1,580.00 200.00 200.00 400.00 200.00 200.00 400.00
Annual Total 171,000.00 240.00 12,616.80 6,103.20 18,960.00 2,400.00 2,400.00 4,800.00 2,400.00 2,400.00 4,800.00

Production
Manager 8,750.00 10.00 663.00 327.00 1,000.00 100.00 100.00 200.00 100.00 100.00 200.00
Total 8,750.00 10.00 663.00 327.00 1,000.00 100.00 100.00 200.00 100.00 100.00 200.00
Annual Total 105,000.00 120.00 7,956.00 3,924.00 12,000.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
Grand Total 276,000.00 360.00 20,572.80 10,027.20 30,960.00 3,600.00 3,600.00 7,200.00 3,600.00 3,600.00 7,200.00

Monthly
Position SSS PhilHealth PAG-IBIG
Salary
EC/ER ER EE Total ER EE Total ER EE Total
Bookkeeper 7,125.00 10.00 525.70 254.30 790.00 100.00 100.00 200.00 100.00 100.00 200.00
Annual Total 85,500.00 120.00 6,308.40 3,051.60 9,480.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
Grand Total 85,500.00 120.00 6,308.40 3,051.60 9,480.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
GRAND
TOTAL 361,500.00 480.00 26,881.20 13,078.80 40,440.00 4,800.00 4,800.00 9,600.00 4,800.00 4,800.00 9,600.00
For the Year Ended December 31, 2019
Monthly
Position SSS PhilHealth PAG-IBIG
Salary
EC/E
ER EE Total ER EE Total ER EE Total
R
Baker 1 7,231.88 10.00 525.70 254.30 790.00 100.00 100.00 200.00 100.00 100.00 200.00
Baker 1 7,231.88 10.00 525.70 254.30 790.00 100.00 100.00 200.00 100.00 100.00 200.00
Total 14,463.75 20.00 1,051.40 508.60 1,580.00 200.00 200.00 400.00 200.00 200.00 400.00
Annual Total 173,565.00 240.00 12,616.80 6,103.20 18,960.00 2,400.00 2,400.00 4,800.00 2,400.00 2,400.00 4,800.00

Production
Manager 8,881.25 10.00 663.00 327.00 1,000.00 100.00 100.00 200.00 100.00 100.00 200.00
Total 8,881.25 10.00 663.00 327.00 1,000.00 100.00 100.00 200.00 100.00 100.00 200.00
Annual Total 106,575.00 120.00 7,956.00 3,924.00 12,000.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
Grand Total 280,140.00 360.00 20,572.80 10,027.20 30,960.00 3,600.00 3,600.00 7,200.00 3,600.00 3,600.00 7,200.00

Monthly
Position SSS PhilHealth PAG-IBIG
Salary
EC/E
ER EE Total ER EE Total ER EE Total
R
Bookkeeper 7,231.88 10.00 525.70 254.30 790.00 100.00 100.00 200.00 100.00 100.00 200.00
Annual Total 86,782.50 120.00 6,308.40 3,051.60 9,480.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
Grand Total 86,782.50 120.00 6,308.40 3,051.60 9,480.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
GRAND
TOTAL 366,922.50 480.00 26,881.20 13,078.80 40,440.00 4,800.00 4,800.00 9,600.00 4,800.00 4,800.00 9,600.00
For the Year Ended December 31, 2020
Monthly
Position SSS PhilHealth PAG-IBIG
Salary
EC/E
ER EE Total ER EE Total ER EE Total
R
Baker 1 7,340.35 10.00 552.50 272.50 835.00 100.00 100.00 200.00 100.00 100.00 200.00
Baker 1 7,340.35 10.00 552.50 272.50 835.00 100.00 100.00 200.00 100.00 100.00 200.00
Total 14,680.71 20.00 1,105.00 545.00 1,670.00 200.00 200.00 400.00 200.00 200.00 400.00
Annual Total 176,168.48 240.00 13,260.00 6,540.00 20,040.00 2,400.00 2,400.00 4,800.00 2,400.00 2,400.00 4,800.00

Production
Manager 9,014.47 10.00 663.00 327.00 1,000.00 100.00 100.00 200.00 100.00 100.00 200.00
Total 9,014.47 10.00 663.00 327.00 1,000.00 100.00 100.00 200.00 100.00 100.00 200.00
Annual Total 108,173.63 120.00 7,956.00 3,924.00 12,000.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
Grand Total 284,342.10 360.00 21,216.00 10,464.00 32,040.00 3,600.00 3,600.00 7,200.00 3,600.00 3,600.00 7,200.00

Monthly
Position SSS PhilHealth PAG-IBIG
Salary
EC/ER ER EE Total ER EE Total ER EE Total
Bookkeeper 7,340.35 10.00 552.50 272.50 835.00 100.00 100.00 200.00 100.00 100.00 200.00
Annual Total 88,084.24 120.00 6,630.00 3,270.00 10,020.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
Grand Total 88,084.24 120.00 6,630.00 3,270.00 10,020.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
GRAND
TOTAL 372,426.34 480.00 27,846.00 13,734.00 42,060.00 4,800.00 4,800.00 9,600.00 4,800.00 4,800.00 9,600.00

For the Year Ended December 31, 2021


Monthly
Position SSS PhilHealth PAG-IBIG
Salary
EC/E
ER EE Total ER EE Total ER EE Total
R
Baker 1 7,450.46 10.00 552.50 272.50 835.00 100.00 100.00 200.00 100.00 100.00 200.00
Baker 1 7,450.46 10.00 552.50 272.50 835.00 100.00 100.00 200.00 100.00 100.00 200.00
Total 14,900.92 20.00 1,105.00 545.00 1,670.00 200.00 200.00 400.00 200.00 200.00 400.00
Annual Total 178,811.00 240.00 13,260.00 6,540.00 20,040.00 2,400.00 2,400.00 4,800.00 2,400.00 2,400.00 4,800.00

Production
Manager 9,149.69 10.00 663.00 327.00 1,000.00 100.00 100.00 200.00 100.00 100.00 200.00
Total 9,149.69 10.00 663.00 327.00 1,000.00 100.00 100.00 200.00 100.00 100.00 200.00
Annual Total 109,796.23 120.00 7,956.00 3,924.00 12,000.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
Grand Total 288,607.23 360.00 21,216.00 10,464.00 32,040.00 3,600.00 3,600.00 7,200.00 3,600.00 3,600.00 7,200.00

Monthly
Position SSS PhilHealth PAG-IBIG
Salary
EC/ER ER EE Total ER EE Total ER EE Total
Bookkeeper 7,450.46 10.00 552.50 272.50 835.00 100.00 100.00 200.00 100.00 100.00 200.00
Annual Total 89,405.50 120.00 6,630.00 3,270.00 10,020.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
Grand Total 89,405.50 120.00 6,630.00 3,270.00 10,020.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
GRAND
TOTAL 378,012.73 480.00 27,846.00 13,734.00 42,060.00 4,800.00 4,800.00 9,600.00 4,800.00 4,800.00 9,600.00

For the Year Ended December 31, 2022


Monthly
Position SSS PhilHealth PAG-IBIG
Salary
EC/E
ER EE Total ER EE Total ER EE Total
R
Baker 1 7,562.22 10.00 552.50 272.50 835.00 100.00 100.00 200.00 100.00 100.00 200.00
Baker 1 7,562.22 10.00 552.50 272.50 835.00 100.00 100.00 200.00 100.00 100.00 200.00
Total 15,124.43 20.00 1,105.00 545.00 1,670.00 200.00 200.00 400.00 200.00 200.00 400.00
Annual
Total 181,493.17 240.00 13,260.00 6,540.00 20,040.00 2,400.00 2,400.00 4,800.00 2,400.00 2,400.00 4,800.00

Production
Manager 9,286.93 10.00 669.80 345.20 1,025.00 100.00 100.00 200.00 100.00 100.00 200.00
Total 9,286.93 10.00 669.80 345.20 1,025.00 100.00 100.00 200.00 100.00 100.00 200.00
Annual
Total 111,443.17 120.00 8,037.60 4,142.40 12,300.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
Grand
Total 292,936.34 360.00 21,297.60 10,682.40 32,340.00 3,600.00 3,600.00 7,200.00 3,600.00 3,600.00 7,200.00

Monthly
Position SSS PhilHealth PAG-IBIG
Salary
EC/ER ER EE Total ER EE Total ER EE Total
10.00 835.00 100.00 100.00 200.00 100.00 100.00 200.00
Bookkeeper 7,562.22 552.50 272.50
Annual
Total 90,746.58 120.00 6,630.00 3,270.00 10,020.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
Grand
Total 90,746.58 120.00 6,630.00 3,270.00 10,020.00 1,200.00 1,200.00 2,400.00 1,200.00 1,200.00 2,400.00
GRAND
TOTAL 383,682.92 480.00 27,927.60 13,952.40 42,360.00 4,800.00 4,800.00 9,600.00 4,800.00 4,800.00 9,600.00

Schedule 21: Office Tools Expense


2018 2019 2020 2021 2022
Office Tools, Beginning (Unused) - Php 125.00 Php 133.13 Php 135.43 Php 137.48
Calculator 1,000.00 1,015.00 1,030.23 1,045.68 1,061.36
Telephone 700.00 710.50 721.16 731.97 742.95
Stapler 200.00 203.00 206.05 209.14 212.27
Wall Clocks 600.00 609.00 618.14 627.41 636.82
Total Cost of Office Tools 2,500.00 2,662.50 2,708.69 2,749.63 2,790.89
Office Tools, Unused 125.00 133.13 135.43 137.48 139.54
Office Tools Expense Php 2,375.00 Php 2,529.38 Php 2,573.25 Php 2,612.15 Php 2,651.35

Schedule 22: Office Supplies Expense


2018 2019 2020 2021 2022
Office Supplies, Beginning (Unused) Php 189.20 Php 201.50 Php 204.99 Php 208.09
Ball Pens 120.00 121.80 123.63 125.48 127.36
Bond Paper 125.00 126.88 128.78 130.71 132.67
Journal Ledger 900.00 913.50 927.20 941.11 955.23
Pencil 20.00 20.30 20.60 20.91 21.23
Scissors 156.00 158.34 160.72 163.13 165.57
Scotch Tape Dispenser 1,425.00 1,446.38 1,468.07 1,490.09 1,512.44
Staple Wire 288.00 292.32 296.70 301.16 305.67
Voucher 750.00 761.25 772.67 784.26 796.02
Total Office Supplies 3,784.00 4,029.96 4,099.87 4,161.84 4,224.29
Unused Office Supplies 189.20 201.50 204.99 208.09 211.21
Total Office Supplies Expense Php 3,594.80 Php 3,828.46 Php 3,894.88 Php 3,953.75 Php 4,013.08
Schedule 23: Salaries-Administrative
2018 2019 2020 2021 2022
Bookkeeper Php 86,400.00 Php 87,696.00 Php 89,011.44 Php 90,346.61 Php 91,701.81
Total Salaries-Administrative Php 86,400.00 Php 87,696.00 Php 89,011.44 Php 90,346.61 Php 91,701.81

Schedule 24: Employee Benefits-Administrative


Schedule 2018 2019 2020 2021 2022
13th Month Pay 25 Php 7,125.00 Php 7,231.88 Php 7,340.35 Php 7,450.46 Php 7,562.22
SSS, PhilHealth, PAG-IBIG
Employer Share 8,828.40 8,828.40 9,150.00 9,150.00 9,150.00
Total Employee Benefits-
Administrative Php 15,953.40 Php 16,060.28 Php 16,490.35 Php 16,600.46 Php 16,712.22

Schedule 25: 13th Month Pay-Administrative


2018 2019 2020 2021 2022
Bookkeeper Php 7,125.00 Php 7,231.88 Php 7,340.35 Php 7,450.46 Php 7,562.22
Total 13th Month Pay-
Administrative Php 7,125.00 Php 7,231.88 Php 7,340.35 Php 7,450.46 Php 7,562.22

Schedule 26: SSS, Philhealth, PAG-IBIG- Administrative


Schedul
e 2018 2019 2020 2021 2022
SSS 20 Php 6,428.40 Php Php Php Php 6,750.00
6,428.40 6,750.00 6,750.00
PhilHealth 20 1,200.00 1,200.00 1,200.00 1,200.00 1,200.00
PAG-IBIG 20 1,200.00 1,200.00 1,200.00 1,200.00 1,200.00
Total SSS, PhilHealth,
PAG-IBIG-
Administrative Php 8,828.40 Php 8,828.40 Php 9,150.00 Php 9,150.00 Php 9,150.00

Schedule 27: Depreciation Expense-Furniture & Fixtures


Schedule 2018 2019 2020 2021 2022
Display Case 27a Php 733.33 Php 733.33 Php 733.33 Php 733.33 Php 733.33
Cabinet 27a 639.67 639.67 639.67 639.67 639.67
Chairs 27a 949.50 949.50 949.50 949.50 949.50
Computer 27a 2,170.00 2,170.00 2,170.00 2,170.00 2,170.00
Office Table 27a 570.00 570.00 570.00 570.00 570.00
Printer 27a 1,519.00 1,519.00 1,519.00 1,519.00 1,519.00
Total Depreciation Expense- Furniture
& Fixtures Php 6,581.50 Php 6,581.50 Php 6,581.50 Php 6,581.50 Php 6,581.50

Schedule 27a: Furniture and Fixtures


Unit Cost Quantity Total Cost Useful Life Depreciation
Display Case 5,500.00 2 11,000.00 15 733.33
Cabinet 9,595.00 1 9,595.00 15 639.67
Chairs 1,899.00 5 9,495.00 10 949.50
Computer 10,850.00 1 10,850.00 5 2,170.00
Office Table 5,700.00 1 5,700.00 10 570.00
Printer 7,595.00 1 7,595.00 5 1,519.00
Schedule 28: Taxes and Licenses
2018 2019 2020 2021 2022
Barangay Business Clearance 250.00 250.00 250.00 250.00 250.00
Initial Tax (0.5% of Capital) 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00
Mayor's Permit 200.00 200.00 200.00 200.00 200.00
Sanitary Business Permit 100.00 100.00 100.00 100.00 100.00
Tax Clearance Certification Fees 100.00 100.00 100.00 100.00 100.00
Fire Inspection Fee 100.00 100.00 100.00 100.00 100.00
Sanitary Inspection Fee 125.00 125.00 125.00 125.00 125.00
Sewer Connection Fee 600.00 600.00 600.00 600.00 600.00
Business Plate 150.00 150.00 150.00 150.00 150.00
Garbage Fee 300.00 300.00 300.00 300.00 300.00
Cedulla 10.00 10.00 10.00 10.00 10.00
Total Business Permit 8,185.00 8,185.00 8,185.00 8,185.00 8,185.00
Name Reservation Fee 125.00 - - - -
Notarial Fees 1,500.00 - - - -
Registration Fee 1,000.00 - - - -
Documentary Stamp 50.00 - - - -
Forms 50.00 - - - -
Payments for SEC 2,725.00 - - - -
Certification Fee 100.00 - - - -
Registration Fee 500.00 - - - -
Documentary Stamp 100.00 - - - -
Book 50.00 50.00 50.00 50.00 50.00
Payments for BIR 750.00 50.00 50.00 50.00 50.00
Total Cost of Taxes and Licenses Php 11,660.00 Php 8,235.00 Php 8,235.00 Php 8,235.00 Php 8,235.00

Schedule 29: Advertising Expense


Schedul
e 2018 2019 2020 2021 2022
Monthly Advertising Expense 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00
Multiply by: Number of Months 12 12 12 12 12
Cost of Advertising 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00
Pre-operations Advertising
29a
Expense Php 7,400.00
Total Advertising Expense Php 19,400.00 Php 12,000.00 Php 12,000.00 Php 12,000.00 Php 12,000.00
Schedule 29a: Pre-operating Advertising Expenses
Total Total
Cost per Unit 12.00
Multiply by: Number of Units to be Produced 200
Total 2,400.00
Flyers 2,000.00
Tarpaulins 3,000.00
Pre-operations Advertising expense Php 7,400.00

Schedule 30: Organizational Expenses


2018 2019 2020 2021 2022
Feasibility Study 2500
Total Organizational Expenses Php 2,500.00 Php - Php - Php - Php -
Schedule 31: Withholding Tax
For the Year Ended December 31, 2018

Tax
Monthly PHI PAG- Taxable Rat on Minimu Monthly Annual
Position SSS Base Excess Withholdin Withholding
Salary C IBIG Income e Exces m Tax g Tax Tax
s
Direct Labor:
100.0 6,667.0
Baker 1 S 7,125.00 254.30 0 100.00 6,670.70 0 3.70 15% 0.55 208.33 208.89 2,506.62
100.0 6,667.0
Baker 2 S 7,125.00 254.30 0 100.00 6,670.70 0 3.70 15% 0.55 208.33 208.89 2,506.62
14,250.0 200.0 13,341.4
Total 0 508.60 0 200.00 0 7.40 1.11 416.66 417.77 5,013.24
Indirect Labor:
Production 100.0 6,667.0 1,556.0
Manager S 8,750.00 327.00 0 100.00 8,223.00 0 0 15% 233.40 208.33 441.73 5,300.76
100.0 1,556.0
Total 8,750.00 327.00 0 100.00 8,223.00 0 233.40 208.33 441.73 5,300.76

Administrative
:
100.0 6,667.0
Bookkeeper S 7,125.00 254.30 0 100.00 6,670.70 0 3.70 15% 0.55 208.33 208.89 2,506.62
100.0
Total 7,125.00 254.30 0 100.00 6,670.70 3.70 0.55 208.33 208.89 2,506.62
30,125.0 1,089.9 400.0 28,235.1 1,567.1
GRAND TOTAL 0 0 0 400.00 0 0 235.07 833.32 1,068.39 12,820.62

For the Year Ended December 31, 2019

Tax
Monthly PHI PAG- Taxable on Minimu Monthly Annual
Position SSS Base Excess Rate Withholdin Withholding
Salary C IBIG Income Exces m Tax g Tax Tax
s
Direct Labor:

S 100.0 6,667.0
Baker 1 7,231.88 254.30 0 100.00 6,777.58 0 110.57 15% 16.59 208.33 224.92 2,699.00

S 100.0 6,667.0
Baker 2 7,231.88 254.30 0 100.00 6,777.58 0 110.57 15% 16.59 208.33 224.92 2,699.00
14,463.7 200.0 13,555.1
Total 5 508.60 0 200.00 5 221.15 33.17 416.66 449.83 5,397.99
Indirect Labor:
Production S 100.0 6,667.0 1,687.2
Manager 8,881.25 327.00 0 100.00 8,354.25 0 5 15% 253.09 208.33 461.42 5,537.01
100.0 1,687.2
Total 8,881.25 327.00 0 100.00 8,354.25 5 253.09 208.33 461.42 5,537.01

Administrative
:

S 100.0 6,667.0
Bookkeeper 7,231.88 254.30 0 100.00 6,777.58 0 110.57 15% 16.59 208.33 224.92 2,699.00
100.0
Total 7,231.88 254.30 0 100.00 6,777.58 110.57 16.59 208.33 224.92 2,699.00
30,576.8 1,089.9 400.0 28,686.9 2,018.9
GRAND TOTAL 8 0 0 400.00 8 8 302.85 833.32 1,136.17 13,634.00

For the Year Ended December 31, 2020

Tax Monthly Annual


Monthly PAG- Taxable Minimu
Position SSS PHIC Base Excess Rate on Withholding Withholding
Salary IBIG Income m Tax Tax Tax
Excess
Direct Labor:
Baker 1 S 7,340.35 272.50 100.00 100.00 6,867.85 6,667.00 200.85 15% 30.13 208.33 238.46 2,861.50

Baker 2 S 7,340.35 272.50 100.00 100.00 6,867.85 6,667.00 200.85 15% 30.13 208.33 238.46 2,861.50
Total 14,680.71 545.00 200.00 200.00 13,735.71 401.71 60.26 416.66 476.92 5,722.99
Indirect Labor:
Production
Manager S 9,014.47 327.00 100.00 100.00 8,487.47 6,667.00 1,820.47 15% 273.07 208.33 481.40 5,776.80
Total 9,014.47 327.00 100.00 100.00 8,487.47 1,820.47 273.07 208.33 481.40 5,776.80

Administrative
:

Bookkeeper S 7,340.35 272.50 100.00 100.00 6,867.85 6,667.00 200.85 15% 30.13 208.33 238.46 2,861.50
Total 7,340.35 272.50 100.00 100.00 6,867.85 200.85 30.13 208.33 238.46 2,861.50
GRAND TOTAL 31,035.53 1,144.50 400.00 400.00 29,091.03 2,423.03 363.45 833.32 1,196.77 14,361.29

For the Year Ended December 31, 2021

Position Monthly SSS PHI PAG- Taxable Base Excess Rate Tax Minimu Monthly Annual
Withholdin Withholding
Salary C IBIG Income on m Tax g Tax Tax
Exces
s
Direct Labor:

S 100.0 6,667.0
Baker 1 7,450.46 272.50 0 100.00 6,977.96 0 310.96 15% 46.64 208.33 254.97 3,059.69

S 100.0 6,667.0
Baker 2 7,450.46 272.50 0 100.00 6,977.96 0 310.96 15% 46.64 208.33 254.97 3,059.69
14,900.9 200.0 13,955.9
Total 2 545.00 0 200.00 2 621.92 93.29 416.66 509.95 6,119.37
Indirect Labor:

Production S 100.0 6,667.0 1,955.6


Manager 9,149.69 327.00 0 100.00 8,622.69 0 9 15% 293.35 208.33 501.68 6,020.19
100.0 1,955.6
Total 9,149.69 327.00 0 100.00 8,622.69 9 293.35 208.33 501.68 6,020.19

Administrative
:

S 100.0 6,667.0
Bookkeeper 7,450.46 272.50 0 100.00 6,977.96 0 310.96 15% 46.64 208.33 254.97 3,059.69
100.0
Total 7,450.46 272.50 0 100.00 6,977.96 310.96 46.64 208.33 254.97 3,059.69
31,501.0 1,144.5 400.0 29,556.5 2,888.5
GRAND TOTAL 6 0 0 400.00 6 6 433.28 833.32 1,266.60 15,199.25
For the Year Ended December 31, 2022

Tax
Monthl PHI PAG- Taxable on Minimu Monthly Annual
Position SSS Base Excess Rate Withholdin Withholding
y Salary C IBIG Income Exces m Tax g Tax Tax
s
Direct Labor:

S 100.0 6,667.0
Baker 1 7,562.22 272.50 0 100.00 7,089.72 0 422.72 15% 63.41 208.33 271.74 3,260.85

S 100.0 6,667.0
Baker 2 7,562.22 272.50 0 100.00 7,089.72 0 422.72 15% 63.41 208.33 271.74 3,260.85
15,124.4 200.0 14,179.4
Total 3 545.00 0 200.00 3 845.43 126.81 416.66 543.47 6,521.70
Indirect Labor:

Production S 100.0 6,667.0 2,074.7


Manager 9,286.93 345.20 0 100.00 8,741.73 0 3 15% 311.21 208.33 519.54 6,234.48
100.0 2,074.7
Total 9,286.93 345.20 0 100.00 8,741.73 3 311.21 208.33 519.54 6,234.48

Administrative
:

S 100.0 6,667.0
Bookkeeper 7,562.22 272.50 0 100.00 7,089.72 0 422.72 15% 63.41 208.33 271.74 3,260.85
100.0
Total 7,562.22 272.50 0 100.00 7,089.72 422.72 63.41 208.33 271.74 3,260.85
31,973.5 1,162.7 400.0 30,010.8 3,342.8 16,017.0
GRAND TOTAL 8 0 0 400.00 8 8 501.43 833.32 1,334.75 2

Schedule 32: Input VAT


Schedule 2018 2019 2020 2021 2022
Input VAT on Raw Materials 2 23,205.97 25,909.47 28,927.92 32,298.03 36,060.75
Input VAT on Factory Tools 7 1,138.56 1,155.64 1,172.97 1,190.57 1,208.43
Input VAT on Factory Supplies 8 494.40 501.82 509.34 516.98 524.74
Total Input VAT Php 24,838.93 Php 27,566.92 Php 30,610.24 Php 34,005.58 Php 37,793.91

FINANCIAL ANALYSIS

Horizontal Analysis

V-Co Company
Comparative Statements of Comprehensive Income
For the Years Ended December 31, 2018, 2019, 2020, 2021 and 2022

2018 2019 Increase % 2019 2020 Increase %


Net Sales 948,214.29 1,074,326.79 126,112.50 13.30% 1,074,326.79 1,217,212.25 142,885.46 13.30%
Less: Cost of Goods Sold 622,469.45 656,240.04 33,770.59 5.43% 656,240.04 685,413.38 29,173.33 4.45%
Gross Profit 325,744.84 418,086.74 92,341.91 28.35% 418,086.74 531,798.87 113,712.13 27.20%
Less: Operating Expenses 185,691.63 174,547.22 (11,144.42) -6.00% 174,547.22 176,797.04 2,249.83 1.29%
Operating Income 140,053.21 243,539.53 103,486.32 73.89% 243,539.53 355,001.83 111,462.30 45.77%
Interest Income - - - 0.00% - - - 0.00%
Earnings Before Income Tax 140,053.21 243,539.53 103,486.32 73.89% 243,539.53 355,001.83 111,462.30 45.77%
Less: Corporate Income Tax 42,015.96 73,061.86 31,045.90 73.89% 73,061.86 106,500.55 33,438.69 45.77%
Net Income 98,037.24 170,477.67 72,440.42 73.89% 170,477.67 248,501.28 78,023.61 45.77%

2020 2021 Increase % 2021 2022 Increase %


Net Sales 1,217,212.25 1,379,101.48 161,889.23 13.30% 1,379,101.48 1,562,521.97 183,420.50 13.30%
Less: Cost of Goods Sold 685,413.38 716,592.93 31,179.55 4.55% 716,592.93 750,803.58 34,210.65 4.77%
Gross Profit 531,798.87 662,508.55 130,709.68 24.58% 662,508.55 811,718.40 149,209.85 22.52%
Less: Operating Expenses 176,797.04 178,738.50 1,941.46 1.10% 178,738.50 180,706.84 1,968.34 1.10%
Operating Income 355,001.83 483,770.05 128,768.22 36.27% 483,770.05 631,011.55 147,241.51 30.44%
Interest Income - - - 0.00% - - - 0.00%
Earnings Before Income Tax 355,001.83 483,770.05 128,768.22 36.27% 483,770.05 631,011.55 147,241.51 30.44%
Less: Corporate Income Tax 106,500.55 145,131.01 38,630.47 36.27% 145,131.01 189,303.47 44,172.45 30.44%
Net Income 248,501.28 338,639.03 90,137.75 36.27% 338,639.03 441,708.09 103,069.05 30.44%
Horizontal analysis compares line items from one period with another period to assess trends. Its
purpose is to determine the increase or decrease that has taken place.
The net income of the business is increasing in a decreasing rate. This means that the peso
amount of the net income increases but the percentage increase in the net income is decreasing. From
2018 to 2019, the percentage increase is 73.89% which decreases to 45.77% on 2020. On 2021, 36.27%
increase in net income was experience and the percentage increase decreases to 30.44% on 2022.
The gross profit constantly increases from 2018 to 2022. However, the percentage increase of
gross profit has a decreasing rate from 2018 to 2022. Although it appears that the peso value of operating
income increases, there is a decrease in the percentage change in operating income.
These results show that even if there is a continuous increase in income, there is also a converse
increase in the expenditures of the business, though it is minimal. This may be caused by the projected
inflation rate that has been applied to the computation of future valuations and costs.
V-Co Company
Comparative Statements of Financial Position
As of Years Ended December 31, 2018, 2019, 2020, 2021 and 2022

2018 2019 Increase % 2019 2020 Increase %


ASSETS
Currents Assets:
Cash 1,207,887.09 1,388,980.11 181,093.02 14.99% 1,388,980.11 1,634,688.20 245,708.09 17.69%
Raw Materials
Inventory 8,508.86 9,500.14 991.28 11.65% 9,500.14 10,606.91 1,106.77 11.65%
Prepaid Expenses 20,731.67 20,758.36 26.69 0.13% 20,758.36 20,770.52 12.16 0.06%
Total Current Assets 1,237,127.62 1,419,238.60 182,110.98 14.72% 1,419,238.60 1,666,065.62 246,827.02 17.39%

Non-Current Assets:
Manufacturing
Equipment 92,520.00 85,090.00 (7,430.00) -8.03% 85,090.00 77,660.00 (7,430.00) -8.73%
- -
Furniture and Fixtures 47,653.50 41,072.00 (6,581.50) 13.81% 41,072.00 34,490.50 (6,581.50) 16.02%
Total Non-Current - -
Assets 140,173.50 126,162.00 (14,011.50) 10.00% 126,162.00 112,150.50 (14,011.50) 11.11%
TOTAL ASSETS 1,377,301.12 1,545,400.60 168,099.48 12.20% 1,545,400.60 1,778,216.12 232,815.52 15.07%
LIABILITIES AND PARTNER'S
CAPITAL
Liabilities:
SSS Payable 3,370.00 3,370.00 - 0.00% 3,370.00 3,505.00 135.00 4.01%
PhilHealth Payable 800.00 800.00 - 0.00% 800.00 800.00 - 0.00%
PAG-IBIG Payable 800.00 800.00 - 0.00% 800.00 800.00 - 0.00%
Withholding Tax Payable 1,885.36 2,556.81 671.45 35.61% 2,556.81 3,267.62 710.80 27.80%
Income Tax Payable 42,015.96 73,061.86 31,045.90 73.89% 73,061.86 106,500.55 33,438.69 45.77%
VAT Payable 22,236.69 25,338.07 3,101.38 13.95% 25,338.07 28,863.81 3,525.74 13.91%
Utilities Payable 602.24 609.72 7.47 1.24% 609.72 617.30 7.58 1.24%
64.90
Total Current Liabilities 48,871.32 80,588.67 31,717.35 % 80,588.67 114,873.17 34,284.50 42.54%
Total Non-Current
Liabilities - - 0.00% - - - 0.00%
64.90
TOTAL LIABILITIES 48,871.32 80,588.67 31,717.35 % 80,588.67 114,873.17 34,284.50 42.54%

Partner's Capital
Fangon, Capital 265,685.96 292,962.39 27,276.43 10.27% 292,962.39 332,722.59 39,760.20 13.57%
Espejo, Capital 265,685.96 292,962.39 27,276.43 10.27% 292,962.39 332,722.59 39,760.20 13.57%
Fetalco, Capital 265,685.96 292,962.39 27,276.43 10.27% 292,962.39 332,722.59 39,760.20 13.57%
Lucero, Capital 265,685.96 292,962.39 27,276.43 10.27% 292,962.39 332,722.59 39,760.20 13.57%
Padilla, Capital 265,685.96 292,962.39 27,276.43 10.27% 292,962.39 332,722.59 39,760.20 13.57%
10.27
Total Partner's Capital 1,328,429.80 1,464,811.93 136,382.14 % 1,464,811.93 1,663,612.96 198,801.02 13.57%
TOTAL LIABILITIES AND 12.20
PARTNER'S CAPITAL 1,377,301.12 1,545,400.60 168,099.48 % 1,545,400.60 1,778,486.12 233,085.52 15.08%
V-Co Company
Comparative Statements of Financial Position
As of Years Ended December 31, 2018, 2019, 2020, 2021 and 2022

2020 2021 Increase % 2021 2022 Increase %


ASSETS
Currents Assets:
Cash 1,634,688.20 1,957,815.07 323,126.87 19.77% 1,957,815.07 2,368,876.15 411,061.08 21.00%
Raw Materials
Inventory 10,606.91 11,842.61 1,235.70 11.65% 11,842.61 13,222.27 1,379.66 11.65%
Prepaid Expenses 20,770.52 20,782.11 11.60 0.06% 20,782.11 20,793.85 11.73 0.06%
19.47
Total Current Assets 1,666,065.62 1,990,439.79 324,374.17 % 1,990,439.79 2,402,892.27 412,452.48 20.72%

Non-Current Assets:
Manufacturing -
Equipment 77,660.00 70,230.00 (7,430.00) -9.57% 70,230.00 62,800.00 (7,430.00) 10.58%
- -
Furniture and Fixtures 34,490.50 27,909.00 (6,581.50) 19.08% 27,909.00 21,327.50 (6,581.50) 23.58%
-
Total Non-Current 12.49 -
Assets 112,150.50 98,139.00 (14,011.50) % 98,139.00 84,127.50 (14,011.50) 14.28%
17.45
TOTAL ASSETS 1,778,216.12 2,088,578.79 310,362.67 % 2,088,578.79 2,487,019.77 398,440.98 19.08%
LIABILITIES AND PARTNER'S
CAPITAL
Liabilities:
SSS Payable 3,505.00 3,505.00 - 0.00% 3,505.00 3,530.00 25.00 0.71%
PhilHealth
Payable 800.00 800.00 - 0.00% 800.00 800.00 - 0.00%
PAG-IBIG
Payable 800.00 800.00 - 0.00% 800.00 800.00 - 0.00%
Withholding Tax
Payable 3,267.62 4,088.60 820.98 25.12% 4,088.60 5,015.65 927.06 22.67%
Income Tax
Payable 106,500.55 145,131.01 38,630.47 36.27% 145,131.01 189,303.47 44,172.45 30.44%
VAT Payable 28,863.81 32,871.65 4,007.84 13.89% 32,871.65 37,427.18 4,555.53 13.86%
Utilities Payable 617.30 625.00 7.70 1.25% 625.00 632.81 7.81 1.25%
Total Current Liabilities 114,873.17 154,324.61 39,451.44 34.34% 154,324.61 199,449.12 45,124.51 29.24%
Total Non-Current Liabilities - - - 0.00% - - 0.00%
TOTAL LIABILITIES 114,873.17 154,324.61 39,451.44 34.34% 154,324.61 199,449.12 45,124.51 29.24%

Partner's Capital
Fangon, Capital 332,722.59 386,904.84 54,182.25 16.28% 386,904.84 457,578.13 70,673.29 18.27%
Espejo, Capital 332,722.59 386,904.84 54,182.25 16.28% 386,904.84 457,578.13 70,673.29 18.27%
Fetalco, Capital 332,722.59 386,904.84 54,182.25 16.28% 386,904.84 457,578.13 70,673.29 18.27%
Lucero, Capital 332,722.59 386,904.84 54,182.25 16.28% 386,904.84 457,578.13 70,673.29 18.27%
Padilla, Capital 332,722.59 386,904.84 54,182.25 16.28% 386,904.84 457,578.13 70,673.29 18.27%
Total Partner's Capital 1,663,612.96 1,934,524.18 270,911.23 16.28% 1,934,524.18 2,287,890.65 353,366.47 18.27%
TOTAL LIABILITIES AND
PARTNER'S CAPITAL 1,778,486.12 2,088,848.79 310,362.67 17.45% 2,088,848.79 2,487,339.77 398,490.98 19.08%
The results show that the current assets portion increases at an increasing rate over the next five
years. This is due to the greater inflow of income to the company and lesser disbursement or costs. Only
those expenses essential to the business are incurred. The decreases in the non-current asset are due to
non-purchase of fixed asset from 2018 to 2022 and due to recognition of depreciation from these non-
current assets.
The partners capital account is continuously increasing from the very start of the operation but in
a minimal rate.
Vertical Analysis

V-Co Company
Comparative Statements of Comprehensive Income
For the Years Ended December 31, 2018, 2019, 2020, 2021 and 2022

2018 % 2019 % 2020 %


Net Sales 948,214.29 100.00% 1,074,326.79 100.00% 1,217,212.25 100.00%
Less: Cost of Goods Sold 622,469.45 65.65% 656,240.04 61.08% 685,413.38 56.31%
Gross Profit 325,744.84 34.35% 418,086.74 38.92% 531,798.87 43.69%
Less: Operating Expenses 185,691.63 19.58% 174,547.22 16.25% 176,797.04 14.52%
Operating Income 140,053.21 14.77% 243,539.53 22.67% 355,001.83 29.17%
Interest Income - 0.00% - 0.00% - 0.00%
Earnings Before Income Tax 140,053.21 14.77% 243,539.53 22.67% 355,001.83 29.17%
Less: Corporate Income Tax 42,015.96 4.43% 73,061.86 6.80% 106,500.55 8.75%
Net Income 98,037.24 10.34% 170,477.67 15.87% 248,501.28 20.42%

2021 % 2022 %
Net Sales 1,379,101.48 100.00% 1,562,521.97 100.00%
Less: Cost of Goods Sold 716,592.93 51.96% 750,803.58 48.05%
Gross Profit 662,508.55 48.04% 811,718.40 51.95%
Less: Operating Expenses 178,738.50 12.96% 180,706.84 11.57%
Operating Income 483,770.05 35.08% 631,011.55 40.38%
Interest Income - 0.00% - 0.00%
Earnings Before Income Tax 483,770.05 35.08% 631,011.55 40.38%
Less: Corporate Income Tax 145,131.01 10.52% 189,303.47 12.12%
Net Income 338,639.03 24.56% 441,708.09 28.27%
The vertical analysis is a technique for evaluating financial statement data that expresses each
item in a financial statement within a year as a percent of a base amount. It is an analysis statistic
calculated for the relationship between two items on a single financial statement or for two items on
different financial statements. The vertical analysis was used to compare the allocation of the expenses
incurred in relation to the base item amount which is the net sales.
The percentage of Cost of Goods Sold as proportion to Gross Sales from 2018 to 2022 has a
decreasing rate. This shows that for the five-year period, Sales has a higher increase compared to Cost of
Goods Sold. And also, this shows that the enterprise increase its selling price for every year but in a
minimal rate without a change in the units sold.
The profit margin of the enterprise is continuously increasing from 2018-2022. This just means
that the enterprise is efficient in managing their expenses.
V-Co Company
Comparative Statements of Financial Position
As of Years Ended December 31, 2018, 2019, 2020, 2021 and 2022

2018 2019 2020


ASSETS
Currents Assets:
Cash 1,207,887.09 87.70% 1,388,980.11 89.88% 1,634,688.20 91.93%
Raw Materials Inventory 8,508.86 0.62% 9,500.14 0.61% 10,606.91 0.60%
Prepaid Expenses 20,731.67 1.51% 20,758.36 1.34% 20,770.52 1.17%
Total Current Assets 1,237,127.62 89.82% 1,419,238.60 91.84% 1,666,065.62 93.69%

Non-Current Assets:
Manufacturing Equipment 92,520.00 6.72% 85,090.00 5.51% 77,660.00 4.37%
Furnitures and Fixtures 47,653.50 3.46% 41,072.00 2.66% 34,490.50 1.94%
Total Non-Current Assets 140,173.50 10.18% 126,162.00 8.16% 112,150.50 6.31%
TOTAL ASSETS 1,377,301.12 100.00% 1,545,400.60 100.00% 1,778,216.12 100.00%
LIABILITIES AND PARTNER'S CAPITAL
Liabilities:
SSS Payable 3,370.00 0.24% 3,370.00 0.22% 3,505.00 0.20%
PhilHealth Payable 800.00 0.06% 800.00 0.05% 800.00 0.04%
PAG-IBIG Payable 800.00 0.06% 800.00 0.05% 800.00 0.04%
Withholding Tax Payable 1,885.36 0.14% 2,556.81 0.17% 3,267.62 0.18%
Income Tax Payable 42,015.96 3.05% 73,061.86 4.73% 106,500.55 5.99%
VAT Payable 22,236.69 1.61% 25,338.07 1.64% 28,863.81 1.62%
Utilities Payable 602.24 0.04% 609.72 0.04% 617.30 0.03%
Total Current Liabilities 48,871.32 3.55% 80,588.67 5.21% 114,873.17 6.46%
Total Non-Current Liabilities - 0.00% - 0.00% - 0.00%
TOTAL LIABILITIES 48,871.32 3.55% 80,588.67 5.21% 114,873.17 6.46%

Partner's Capital
Fangon, Capital 265,685.96 19.29% 292,962.39 18.96% 332,722.59 18.71%
Espejo, Capital 265,685.96 19.29% 292,962.39 18.96% 332,722.59 18.71%
Fetalco, Capital 265,685.96 19.29% 292,962.39 18.96% 332,722.59 18.71%
Lucero, Capital 265,685.96 19.29% 292,962.39 18.96% 332,722.59 18.71%
Padilla, Capital 265,685.96 19.29% 292,962.39 18.96% 332,722.59 18.71%
Total Partner's Capital 1,328,429.80 96.45% 1,464,811.93 94.79% 1,663,612.96 93.54%
TOTAL LIABILITIES AND PARTNER'S
CAPITAL 1,377,301.12 100.00% 1,545,400.60 100.00% 1,778,486.12 100.00%
V-Co Company
Comparative Statements of Financial Position
As of Years Ended December 31, 2018, 2019, 2020, 2021 and 2022

2021 2022
ASSETS
Currents Assets:
Cash 1,957,815.07 93.74% 2,368,876.15 95.25%
Raw Materials Inventory 11,842.61 0.57% 13,222.27 0.53%
Prepaid Expenses 20,782.11 1.00% 20,793.85 0.84%
Total Current Assets 1,990,439.79 95.30% 2,402,892.27 96.62%

Non-Current Assets:
Manufacturing Equipment 70,230.00 3.36% 62,800.00 2.53%
Furnitures and Fixtures 27,909.00 1.34% 21,327.50 0.86%
Total Non-Current Assets 98,139.00 4.70% 84,127.50 3.38%
TOTAL ASSETS 2,088,578.79 100.00% 2,487,019.77 100.00%

LIABILITIES AND PARTNER'S CAPITAL


Liabilities:
SSS Payable 3,505.00 0.17% 3,530.00 0.14%
PhilHealth Payable 800.00 0.04% 800.00 0.03%
PAG-IBIG Payable 800.00 0.04% 800.00 0.03%
Withholding Tax Payable 4,088.60 0.20% 5,015.65 0.20%
Income Tax Payable 145,131.01 6.95% 189,303.47 7.61%
VAT Payable 32,871.65 1.57% 37,427.18 1.50%
Utilities Payable 625.00 0.03% 632.81 0.03%
Total Current Liabilities 154,324.61 7.39% 199,449.12 8.02%
Total Non-Current Liabilities - 0.00% 0.00%
TOTAL LIABILITIES 154,324.61 7.39% 199,449.12 8.02%

Partner's Capital
Fangon, Capital 386,904.84 18.52% 457,578.13 18.40%
Espejo, Capital 386,904.84 18.52% 457,578.13 18.40%
Fetalco, Capital 386,904.84 18.52% 457,578.13 18.40%
Lucero, Capital 386,904.84 18.52% 457,578.13 18.40%
Padilla, Capital 386,904.84 18.52% 457,578.13 18.40%
Total Partner's Capital 1,934,524.18 92.61% 2,287,890.65 91.98%

TOTAL LIABILITIES AND PARTNER'S CAPITAL 2,088,848.79 100.00% 2,487,339.77 100.00%


Majority of the total assets are classified as current assets. 89.82% of total asset on the first year
are current assets. The business has no additional fixed asset investment from 2018 to 2022 and this
causes the decrease on the rate of the percentage change in non-current assets over the total assets.
The percentage of total liabilities over total asset ranges from 3% to 8% for a period of five years.
This can be justified by the business' decision not to use debt as source of financing the operations. There
are no accounts payable, notes payable or loans payable. Therefore, the results show that the liabilities
remain at a minimum for the five-year period.
The percentage of partners' equity has a decreasing rate over the period of five years This is
because the ratio of the liabilities is increasing over the five year period which tends the equity to
decrease its ratio. However, minimal increases were observed.
FINANCIAL RATIOS
Financial Ratios are indicators of how well a business is doing. They are financial information
used for comparisons and decision-making processes. They may be able to help potential investors to
decide on how to go about a business venture. They are essential especially to those who are looking to
invest into a good company.

Profitability Ratios- These are the ratios that guide investors on whether a certain business is profitable
or not. They show the returns and the potential profitability of the company in year or on a comparative
data analysis of several years.

2018 2019 2020 2021 2022


Gross Profit 325,744.84 418,086.74 531,798.87 662,508.55 811,718.40
1,074,326.7 1,217,212.2 1,379,101.4 1,562,521.9
Divide by: Net Sales 948,214.29 9 5 8 7
Gross Profit Rate 34.35% 38.92% 43.69% 48.04% 51.95%

There is a continuous increase in the gross profit ratio. One of the reasons why the gross profit increase
over the years is the efficient use of raw materials and the strong demand of the product.

2018 2019 2020 2021 2022


Net Income 98,037.24 170,477.67 248,501.28 338,639.03 441,708.09
Divide by: Net Sales 948,214.29 1,074,326.79 1,217,212.25 1,379,101.48 1,562,521.97
Return on Sales 10.34% 15.87% 20.42% 24.56% 28.27%

The computed return on sales ratio in the first is 10.34% , this indicates that there is only 10.34
centavos income for every peso sale on the first year of business operation and it increases by 4-5% every
year. This ratio indicates that the business will be able to recover all its expenses and at the same time,
still generate income to be distributed to the partners.

2018 2019 2020 2021 2022


Net Income 98,037.24 170,477.67 248,501.28 338,639.03 441,708.09
Divide by: Average Total 1,377,301.1 1,461,350.8 1,661,808.3 1,933,397.4 2,287,799.2
Assets 2 6 6 6 8
Return on Assets 7.12% 11.67% 14.95% 17.52% 19.31%

The return on asset shows the income generated for every peso invested. For the business first
year of operation, it will able to generate 7.12 centavos for every peso in its investment in which the
business needs to improve on the efficiency in production especially in its raw materials.

2018 2019 2020 2021 2022


Net Income 98,037.24 170,477.67 248,501.28 338,639.03 441,708.09
Divide by: Average
Partners' Equity 1,328,429.80 1,396,620.86 1,564,212.44 1,799,068.57 2,111,207.42
Return on Partners'
Equity 7.38% 12.21% 15.89% 18.82% 20.92%

The return on partners equity ratio shows that there is 7.38 centavos of income derived for every
peso of partners equity for the first year of operation. The computed return on equity shows low
profitability for the partners investments but still shows that there is a chance of higher return as the trend
of the return on equity is increasing throughout the five years.

Liquidity Ratios- These are the ratios used by the company and investors to see the ability of a company
to meet its obligations as they become due.

2018 2019 2020 2021 2022


Current Assets 1,237,127.62 1,419,238.60 1,666,065.62 1,990,439.79 2,402,892.27
Divide by: Current
Liabilities 48,871.32 80,588.67 114,873.17 154,324.61 199,449.12
Current Ratio 25.31 17.61 14.50 12.90 12.05

The current ratio indicates that the business has enough current assets to settle its short term
obligations. In the first year of business operation, there is Php 25.31 available for paying a Php 1.00
current liability. The current ratio is decreasing throughout the five years but it can still pay its obligation.

2018 2019 2020 2021 2022


1,348,060.5 1,515,142.1 1,746,838.7 2,055,954.0 2,453,003.6
QuickAssets 9 1 0 7 5
Divide by: Current
Liabilities 48,871.32 80,588.67 114,873.17 154,324.61 199,449.12
Quick Ratio 27.58 18.80 15.21 13.32 12.30

The computed quick ratio of the business in the first year of operation is 27.58, in which it
indicates that there is Php 27.58 readily-available assets to pay Php 1.00 of short-term obligation.

2018 2019 2020 2021 2022


Current Assets 1,237,127.62 1,419,238.60 1,666,065.62 1,990,439.79 2,402,892.27
Less: Current Liabilities 48,871.32 80,588.67 114,873.17 154,324.61 199,449.12
Net Working Capital 1,188,256.30 1,338,649.93 1,551,192.46 1,836,115.18 2,203,443.15

Net working capital measures the ability of the business to meet its current obligation with its
current assets. The business has high net working capital which indicates that the business has the capital
to expand without the need for additional investment.

Management Efficiency Ratios- These ratios are typically used to analyze how well a company uses its
assets and liabilities internally. Efficiency Ratios can calculate the turnover of receivables, the repayment
of liabilities, the quantity and usage of equity and the general use of inventory and machinery.

2018 2019 2020 2021 2022


Net Sales 948,214.29 1,074,326.79 1,217,212.25 1,379,101.48 1,562,521.97
Divided by: Average Total
Assets 1,377,301.12 1,461,350.86 1,661,808.36 1,933,397.46 2,287,799.28
Total Asset Turnover
Ratio 68.85% 73.52% 73.25% 71.33% 68.30%

In the first year, there is 68.85% of total asset turnover in which it needs to be more efficient in
generating its sales using its assets.
Leverage Ratios- These are ratios are some of the several financial measurements that look at how much
capital comes in the form of debt (loans), or assesses the ability of a company to meet financial
obligations.

2018 2019 2020 2021 2022


Total Equity 1,328,429.80 1,464,811.93 1,663,612.96 1,934,524.18 2,287,890.65
Divide by: Total Assets 1,377,301.12 1,545,400.60 1,778,216.12 2,088,578.79 2,487,019.77
Equity Ratio 96.45% 94.79% 93.56% 92.62% 91.99%

High equity ratio indicates that most of the companys available resources are from the owners
contribution in which in this business will be able to continue in its operations without the need for debt
financing
2018 2019 2020 2021 2022
Total Liabilities 48,871.32 80,588.67 114,873.17 154,324.61 199,449.12
Divide by: Total Equity 1,328,429.80 1,464,811.93 1,663,612.96 1,934,524.18 2,287,890.65
Debt-to-Equity Ratio 3.68% 5.50% 6.91% 7.98% 8.72%

The business is financially stable because it shows that the business has a ratio which is less than
one is conservative in a way that there is no need to use debt to increase profit.

2018 2019 2020 2021 2022


Initial Investment 1,250,000.00 42,112.19
Divide by: Annual Cash
Flow 1,207,887.09 1,388,980.11 1,634,688.20 1,957,815.07 2,368,876.15
Payback Period 1.03 0.03 - - -

The payback period is the length of time required to cover the cost of an investment. The payback
period shows that the investment of the business may be recovered in more than one year, 376 days to be
exact. The computed payback period is good indicator of undertaking in the project as longer periods are
typically not desirable for investments.
CHAPTER V
SOCIO-ECONOMIC STUDY
Primarily, the study aims to generate profits. However, it also intends to contribute to the
betterment of the society and its environment. V-Co considers its role in helping and providing benefits to
the community. As a part of the society, it is our responsibility to help the industry to improve in terms of
social, environmental and economic aspects. With this matter, V-Co serves as major contributor in all
these aspects as it provides as avenue for employment and health awareness and consciousness.
The socio-economic aspect of this is study will show the importance of the business to the
external factors affecting its operation together with its employees. The objective of this chapter is to
determine how the business will be able to affect the social, environmental and economic aspect of the
community and in the long-run, the positive changes of the society.
CONTRIBUTION TO THE COMMUNITY
Through the V-Co., people residing in and out of Baguio will be benefited through lowering the
rate of unemployment in the locality. The proponents will open jobs to improve the standard of living of
the workers and open opportunities for change. This would potentially reduce the rate of unemployment
within the area and later on, within the country. With their (the employed applicants) proper skills and
efforts, the business will realize more profit. The business will be granting theses employees just
compensation and significant benefits like SSS, Philhealth, PAG-IBIG and other premium benefits as
required by the government. Other incentives will also be given (such as Christmas Bonus) to them
relative to their productivity at work. The community will be greatly benefited as it will help them create
a better life for their family. The business will also contribute to the public by providing delicious and
healthy cookies for their sweet cravings.
CONTRIBUTION TO THE GOVERNMENT
V-Co is a general business partnership. In this aspect, the company can contribute to the
government by paying business taxes, licenses and other fees. These taxes and fees paid to the
government would increase the revenue of the same. Since establishing the companys services means
additional source of income for the city, it is therefore concluded that there is a positive indication that
there will be strengthened capability for the city to finance development projects such as betterment of
roads and infrastructures, health and educational programs, and community services.
Taxes that would be contributed form establishing this business would be individual income taxes
of the partners, Value-Added Tax, Real Property Taxes, Annual Business Income tax and other taxes as
required by law.

CONTRIBUTION TO THE SUPPLIERS


V-Co uses a recipe whereby many raw materials are needed. Almost all of these raw materials are
best bought locally because of their fresh and organic nature. Three of the raw materials needed in
creating V-Co are squash, carrots and malunggay. These raw materials are grown in the Philippines.
By selling V-Co in Baguio City, the business will create an opportunity for the suppliers of raw
materials to increase their earnings and market. V-Co will serve as a means to the suppliers by which they
can increase their profits through patronizing locally-made raw materials. In this way, there is an indirect
contribution to our economy in its competitiveness. Lastly, the product would not be developed if not for
the necessary raw materials used in creating it.
CONTRIBUTION TO THE CONSUMERS
With the increase of manufacturers of the product, there will be an increase in supply which will
lead to decrease in price. V-Co is a vegetarian style of cookie. This significantly promotes a healthy
living and helps the community realize the health is also wealth. Through eating a vegetable cookie, the
people will be more aware that we need to watch our health. Lastly, the location of the business is also
quite practical. Through V-Co, consumers no longer have to go far since the business will be easily
located within the city proper. It adds to their convenience and makes it more appealing since there would
be no need to endure traffic as when travelling far.
CONTRIBUTION TO THE ENVIRONMENT
Profitability, though one of the goals of this project, is not the major objective. As a socially
responsible business, it adheres to the responsibility of having a good impact on the environment. V-Co
serves cookies in a environmental friendly pack. This would help lessen the burden on the environment as
so much waste is produced every day solely from cookies due to the use of plastic packs. Also, following
the rules and regulations imposed by the local government for proper waste disposal and using the 3Rs
for waste management will be V-Cos contribution to the environment. This will be practiced through
ways such as reducing the use of plastics by replacing the packaging of products with environmental
friendly packs instead.
CHAPTER VI
MANAGEMENT STUDY
The process of working with available resources by performing functions of planning, organizing,
staffing, leading, and controlling to create a better environment where people can harmoniously work
together to achieve the organizational objectives effectively and efficiently is what management in all
organization and business do.
It is one of the most essential factors that must be considered when creating a business because
wrong management of resources may cause the business to operate in losses and not profits. Strategy
formulation, strategy implementation, and strategy evaluation are being used which is the basic functions
of management. It entails the determination of vision-mission statements, organizational chart and duties,
responsibilities and qualification of each position.
BASIC CONSIDERATIONS
The proposed project aims to develop a product that will serve as an alternative for typical
cookies. In addition, it will promote health consciousness and nutritious product. The product also
encourages people to eat healthy and live healthy. The project intends to contribute in generating
employment and income for the locals through production to satisfy the needs and wants of consumers
while successfully realizing profit.

Vision: We envision V-Co. as a part of transformation of the communities into having a more healthy
living and be recognized in the country.

Mission: To provide a satisfying snack and encourage people to live healthy.


FORM OF OWNERSHIP
V-Co. will operate as a partnership type of organization. It is composed of five (5) partners who
came up and agreed upon the idea of establishing a bakery fin Baguio City through their contribution of
money, property and industry thereby binding themselves with the responsibilities to the organization and
the goal of dividing profits among themselves. The profit is to be divided among the partners in
proportion to their capital contributions. In case of losses, the partners shall share them according to their
profit-sharing ratio.
CAPITALIZATION
The partners agreed that each partner shall contribute an amount of Php 250,000.00. This will total to
Php1,250,000.00 as the initial capital for the company.
Partners Contribution
PARTNERS CAPITAL CONTRIBUTION (in Php)
Karl Marion Fangon 250,000.00
Fenella Mae Espejo 250,000.00
Dannilyn Fetalco 250,000.00
Agnes Lucero 250,000.00
Rhoby Lye Padilla 250,000.00
Total 1,250,000.00

ORGANIZATIONAL STRUCTURE
The organizational structure of a business is necessary to establish the positions and
corresponding roles of the employees which avoids the possibility of overlapping of work, causing
inefficiency and ineffectiveness in the course of the business.
KEY OFFICERS AND EMPLOYEES
To ensure that the business will operate on its full potential, there is a need to establish an
efficient management system. This management system will serve as guide to the managers on how to
direct rank-and-file employees on their jobs in order to ensure smooth business transactions. The entity
will operate with the following people:
Production Manager
The production manager shall be responsible for planning, leading, controlling, and organizing
the endeavors of the organization towards the achievement of the objectives and goals of the same. He
shall maintain established quality controls of the whole production process and sees that the standard
quality set by the organization is met and followed with every output. He shall be in-charge of the proper
administration of business affairs and book keeping. He shall also serve as the head of human resources
and decide on qualified candidates for employment with the company.
Qualifications:
He must be a partner who is a graduate of any business-related course.
He must have three (3) years of experience in product development and manufacturing
operations.
He must have the ability to motivate subordinates.
He must be proficient in oral and written communication and computer literate.
He must be willing to work for long hours as demanded by his job.
He must not be more than 40 years old.
Bakers
They shall responsible for the actual process of creating the edible V-Co. They shall be the only
employees who will know the recipe and secret ingredients of the organization aside from its owners.
They shall always practice proper hygiene and sanitation and in doing so, shall not affect the quality of
the products of the company.
Qualifications:
They must be professional bakers.
They must have at least three (3) years of professional baking experience.
They must be willing to undergo training.
They must be physically fit and of good moral character.
Bookkeeper

The bookkeeper shall be in-charge of maintains records of financial transactions by establishing


accounts; posting transactions; ensure legal requirements compliance.

Qualifications:
They must have a background of basic accounting.
They must have a pleasant personality.
They must be proficient in oral communication.
They must be willing to undergo training.
They must be at least 23 years old.
ORGANIZATIONAL CHART

Production Manager

Bookkeeper

Baker One Baker Two

ORGANIZATIONAL POLICIES
The organizational policies of a company serve as guidelines on the hiring and recruitment,
general employment regulations and the proper conduct of business operations. These highlight the rules
and regulations set by the company as a standard of employee behavior in the office/work environment.
Recruitment and Pre-selection
An applicant must proceed to the managers office to get an application form. The accomplished
form must be submitted to the same office with bio-data, NBI clearance, Barangay clearance, Transcript
of records, two 2x2 ID picture, a certification from the previous employer (if applicable) and other
documents as deemed necessary.
Selection Procedures
Applicants who have successfully passed the preliminary review shall be called by the manager
for an interview. When the applicant is found to be physically, mentally and psychologically fit for the
position, he will be informed to undergo two-week training. During the training, the trainee shall be
entitled to free meals and travel expenses. If the trainee has passed the training requirements, he is
required to process his SSS, PAG-IBIG, and PHILHEALTH within a reasonable period of time.

Selections and Hiring of Personnel


Applicants for employment shall be based on physical fitness, mental ability, educational
qualifications and skills for the job.

General Employment Regulations


Timekeeping
All personnel must personally punch their timecards to record their time of
arrival and departure. The timecards shall serve as the basis for the computation of
salaries.
Any employee who punches in earlier than his work time schedule shall not be
given credit for the difference. Employees are allowed to punch in ten (10) minutes
before and after their term of duty.
No employee under the influence of liquor or prohibited drugs shall beallowed
to punch-in his/her time card.

Hours of Work
The regular working hours of employees is eight (8) hours a day. The employees
are required to be on duty or be at a prescribed workplace during the period.
There shall be one shift for the staff. The first shift shall start at 8:00am and shall
end at 5:00pm including one hour meal break.

Meal Break
The meal breaks are not included in the eight-hour paid shift. There shall be one
hour(1) lunch break for all the employees.
They shall be given fifteen (15) minutes of coffee break or rest period in the
morning and in the afternoon.
Punching in immediately after an employee punched-out for lunch is
discouraged. There should be at least 30 minutes interval. Meal breaks or rest
periods beyond the allowed time shall be considered a demerit on the hours of work
of the employee.

Tardiness and Under time


All employees are expected to report on time. Employees who are late for fifteen
(15) minutes, which is beyond allowable period, shall be imposed with deductions
from their salary.
Overtime work can offset against an under time subject to the approval of the
supervisor.
Manual recording of time in the timecard is not allowed except when the bandy
clock is out of order.
Absences
All absences other than those due to illness must be covered by previously
approved leave application.
An employee who is absent without prior permission must submit a written
explanation to the supervisor within 48 hours after he returns to work. Failure to do
so would mean an automatic recording of the said absence as Absent Without Leave
(AWOL).
JOB REQUIREMENTS AND COMPENSATIONS
The salaries and wages of the employees shall be paid twice a month- on the 15th and 30th days.
(table) employees and compensation.
Employees and their Corresponding Compensation
Position No. of Employees Salary/ Wages per month (in Php)
Manager(Partner) 1 8,750.00
Bookkeeper 1 7,125.00
Bakers 2 14,250.00
Total 30,125.00

LEGAL REQUIREMENTS
In conformity with existing laws and ordinances, the company shall comply with the mandated
requirements to be secured and completed prior to the operation of the business. Listed on the table below
are the various requirements as prescribed with their corresponding legal cost.
Cost of Legal Requirements
Description Amount( in Php)
Training Cost 5000
License Fee 375
Sanitary Permit 200
Garbage Fee- based on floor area 2500
Mayors Permit 100
Barangay District Clearance 800
Fire Safety certificate by Bureau of fire and protection 500
Business Name Registration-DTI 500
Document Stamp 15
BIR Registration Fee 500
Articles of Partnership Registration-SEC 7500
Legal Research Fee 750
Environment Compliance Certificate- non critical 4000
PROJECT SCHEDULE
The project schedule illustrates the different tasks to be undertaken for the realization of the
business.
SCHEDULE OF PROJECT ACTIVITIES
ACTIVITIES TIME
Project Feasibility Study January- May 2017
Formation of Partnership June 2017
Accomplishment of Legal Requirements June 2017
Procurement of Funds July to August 2017
Site Location and Improvement September 2017
Purchase of Equipment and Facilities September 2017
Installation of Equipment and Facilitates October 2017
Hiring and Training of Personnel, Installation of October to December 2017
Accounting System
Acquisition of Raw Materials October 2017
Start Operations January 2018
ACTI 2017 2018
VITIE
Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan
S
Project
Feasibility Study
Formation of
Partnership
Accomplishment
of Legal
Requirements
Procurement
Funds
Site Location
and
Improvement
Purchase of
Equipment and
Facilities
Installation of
Equipment and
Facilities
Hiring and
Training of
Personnel,
Installation of
Accounting
System
Acquisition of
Raw Materials
Start of
Operations
CHAPTER VII
ACCOUNTING SYSTEM STUDY
This portion of the study introduces the different business cycles that undergoes within the
company. This chapter also presents the accounting system of each business cycles documented and
translated into a flowchart together with the threats for each cycle and their related controls necessary for
proper communication and relaying of information from one cycle to another. The cycles include the
revenue or receipt cycle, purchase and expenditure or disbursement cycle, the production cycle and the
payroll cycle.
As stated above, the different cycles are represented with flowcharts wherein it shows the
relationships of the positions or jobs within it and the roles of each employee. The flowcharts showcase
the simplified system of the business. Along with these flowcharts are the step-by-step process of each
cycle and their corresponding threats and internal controls.
The internal control system of a business is very essential to an organization because effective
controls reduce the risk of asset loss and help ensure that plan information is complete and accurate,
financial statements are reliable, and that the plan complies with laws and regulations.
Chart of Accounts
The chart of accounts is a list of accounts and their account numbers that are used in the business.
It is used as a guide for the bookkeeper in recording transactions.
Table ___. Chart of Accounts
ASSETS ACCOUNT TITLE
Current Asset
110 Cash
120 Raw Materials Inventory
130 Prepaid Expenses
Non-Current Assets
210 Manufacturing Equipment
215 Accumulated Depreciation- Manufacturing Equipment
220 Furniture and Fixtures
225 Accumulated Depreciation- Furniture and Fixtures
LIABILITIES
Current Liabilities
310 SSS Payable
320 Philhealth Payable
330 PAG-IBIG Payable
340 Withholding Tax Payable
350 Income Tax Payable
360 VAT Payable
370 Utilities Payable
PARTNERS EQUITY
510 Fangon, Capital
520 Espejo, Capital
530 Fetalco, Capital
540 Lucero, Capital
550 Padilla, Capital
INCOME
610 Sales
620 Interest Income
EXPENSES
710 Cost of Goods Sold
720 Purchases
730 Raw Materials
740 Direct Labor
750 Factory Overhead
760 Pre-operating Advertising Expense
770 Rent Expense-Administrative
780 Utilities-Administrative
790 Office Tools Expense
800 Office Supplies Expense
810 Salaries-Administrative
820 Employee Benefits-Administrative
830 Depreciation Expense- Furniture & Fixtures
840 Taxes and Licenses
850 Advertising Expense
860 Organizational Expenses
870 Advertising Expense
880 SSS Contribution expense
890 PAG-IBIG Contribution expense
900 PhilHealth Contribution expense
910 Income Tax expense

Description of Account Titles


An account title is the unique name assigned to an account in an accounting system. Without an
account title, the possibility of making an incorrect entry into the wrong account would be much higher.
Assets
These are resources with economic value that an individual, corporation or country owns or
controls with the expectation that it will provide future benefit. Assets are reported on a company's
balance sheet, and they are bought or created to increase the value of a firm or benefit the firm's
operations.

Cash
It comprises any item on hand with monetary value that a bank will accept for deposit and
immediate credit. Cash includes coins and currency, personal checks, bank drafts, and money orders. It
must be unrestricted in use. This means that cash must be readily available in the payment of current
obligations and not be subject to any restrictions, contractual or otherwise. securities.

Raw Materials Inventory


Raw materials inventory is the total cost of all component parts currently in stock that have not
yet been used in work-in-process or finished goods production. There are two subcategories of raw
materials, which are: Direct and Indirect materials. Direct Materials are incorporated into the final
product while indirect materials are not and are utilized only during the production process.
Prepaid Expenses
These are expenses paid and recorded as assets before they are used or consumed. Examples of
these are prepaid rent, prepaid insurance, and prepaid advertising
Manufacturing Equipment
Manufacturing Equipment are tangible items that are expected to be used in more than one period
and that are used in basically in production.
Furniture and Fixtures
Furniture and fixtures are larger items of movable equipment that are used to furnish an office.
Examples are bookcases, chairs, desks, filing cabinets, and tables. This is a commonly-used fixed asset
classification that is categorized as a long-term asset on an organization's balance sheet. These assets have
a mid-range depreciation period, typically in the range of five to ten years.
Liabilities
They are the companys economic liability or financial debt or obligations that arise during the
course of its business operations.
Payables
Payables are the aggregate amount of an entity's short-term obligations to pay suppliers for
products and services which the entity purchased on credit. If accounts payable are not paid within the
payment terms agreed to with the supplier, the payables are considered to be in default, which may trigger
a penalty or interest payment.
Capital
Capital is the investment by an entity's owners in a business, plus the impact of any profits or
losses. This is may be considered the residual wealth of a business after all of its liabilities have been
settled.

Income
Income is increases in economic benefits during the accounting period in the form of inflows or
enhancements of assets or decreases of liabilities that result in increases in equity, other than those
relating to contributions from equity participants
Sales
This refers to the revenues earned when a company sells its goods, products, merchandise, etc.
Expenses
Expenses take the form of actual cash payments such as wages and salaries, rent, advertising and
also included are the expired portion of an asset. Expenses are summarized and included in the income
statement as deductions from the revenue. Revenue minus expenses calculates the net profit for the
business for a given period.

FLOWCHARTS
Revenue/Receipts Cycle

Production
Manager
Bookkeeper

Receive and review


customer orders
Customer Order
Slip
Customer Order 2
Prepare customer order slip Slip 1
Customer
confirms order slip
F
Process customer
order and punched in
Check
Bookkeeper in the cash register
Availability of

Notify
Prepare and send Available
customer of Yes
official receipt to
availability
customer
then process
order
No

Official Official Notify customer


receipt 2 receipt 1 for cancellation of
order

Customer
Revenue/Receipt Cycle
The revenue cycle is the set of activities in a business which brings about the exchange of goods
or services with customers for cash. It is a recurring set of business activities and related information
processing operations associated with providing goods and services to customers and collecting their cash
payments. The primary external exchange of information is with customers.
In this cycle, the production manager receives orders from customer and he will duly prepare the
order made by the customer in the sales order slip. The order slip is prepared in two copies: one for the
bookkeeper and one for the personnel under production. The order slip is sent to the customer for
confirmation of order. After it is accepted, a production manager or one of the baker will check for the
availability of the goods ordered. If there is enough inventory, then the transaction will pursue but if
otherwise, then the customer will be notified for the cancellation of his/her order. If it has enough
inventory, the bookkeeper will process the transaction and then the customer will pay for the amount due
to the production manager. When the customer pays, the bookkeeper will prepare two copies of official
receipt: the original copy will be sent to the customer while the other one will be kept in the hands of the
accountant.
In this cycle, the accountant will receive the customer order slip, delivery receipt, sales invoice
and official receipt so he/she can verify all source documents in order to check the correctness of the
information within them. Upon verification, the accountant then updates the related accounts in the
general journal and files the documents. These forms will serve as the source documents of the accountant
if future negotiation arises and when discrepancies would be detected later on.
Internal Control System on the Revenue/Receipt Cycle
Sales to Customers with Poor Credit
This can really be a problem since a customer with poor credit will most likely neglect its
responsibility in paying the goods he/she purchased. If this happens, this could result in uncollectible
accounts that results in lost assets and revenues. This problem can be prevented by following the proper
authorization procedures for credit sales like setting credit limits for each customer with which the credit
should be approved first prior to releasing goods from inventory. It can be also done by granting general
authorization to sales order staff for customers who are existing, under credit limits and no outstanding
balances. Lastly, accurate records of customer balances and credits must also be maintained.
Orders that are not Legitimate
You cant make good credit decisions or collect from a customer you havent properly identified.
Like the one mentioned above, this could result in uncollectible accounts that results in lost assets and
revenues due to missing identity of the fictitious customer. Traditionally, legitimacy of customer orders is
established by receipt of a signed purchase order from the customer.
Stock outs and/or excess inventory
If the company runs out of raw materials for production, manufacturing process will be
interrupted thus results to losing sales due to customer complaints in the delay of their order. Also, if the
company carried to much goods in their inventory, they will incur carrying costs and/ or have to mark the
inventory down. Both of this are very critical in the production department of a company. One of the
things that the company should do in order to avert the impending crisis is to have an accurate inventory
control and sales forecasting system. The company may also resort to use the perpetual inventory method
to track down the account balance of the inventory to monitor when to order some more inventory so as
not to interrupt the manufacturing process. They can also do periodic physical counts of inventory to
verify the accuracy of their records.
Error in Recording
Purchase transactions executed should be reported promptly to their respective accounts.
Management should institute policies to assure that all purchases and cash disbursements are recorded
properly and in the proper period. Also, control recording function by preparing input totals, reconciling
journals and ledgers and establishing procedures for processing and recording.
Access to Assets.
Establish procedures to safeguard assets by restricting access to purchasing and cash
disbursement records and forms. Otherwise, records or forms may be misused by unauthorized personnel,
potentially resulting to misstated accounts or diversion of cash and other assets. Purchasing and cash
disbursements must also be controlled through pre-numbered forms and documents, and maintaining lists
and samples of authorized signatories. Segregating responsibilities for authorizing, executing and
recording is also an essential internal control procedure in order to avoid fraud.
Expenditure/Disbursement Cycle

Baker
Production
Manager

Checks and summarizes Review and approve the documents received


inventory records

Prepares purchase order


Prepare purchase
requisitions

Purchase Order
1
Purchase Requisition Purchase Order
1 2
Purchase Requisition
2

Baker

Production
Manager F

Baker buys materials from


suppliers

Baker receives official


receipt from supplier
Bookkeeper
Official Receipt

Expenditure/Disbursement Cycle
The expenditure cycle is a set of purchasing decisions and actions. It's the reiterative process of
preparing purchase for and ordering goods, receiving these items ordered, approving and checking the
invoices for these items and paying the invoices.
During this cycle, the baker is responsible for checking the inventory for raw materials. He also
has the duty to summarize the inventory records in the production department. When the inventory needs
to be replenished, he/she will then prepare purchase requisitions in two copies: one for the bookkeeper
and one also for the production manager. The production manager will then prepare a purchase order for
the replenishment of inventory. The purchase order is made with two copies: one for the bookkeeper and
one for the baker who will purchase the raw materials.
When materials are bought the official receipt as a source document, the production manager
receives the goods and reviews the orders and compare it to the purchase order for discrepancies in
quantity, quality and any other relevant factors.
Lastly, the bookkeeper will then update all relevant accounts in the books of the company in
relation to the transactions that occurred, using the source documents prepared for proper recording.
Internal Control System on the Expenditure/Disbursement Cycle
Stock outs and/or excess inventory
If the company runs out of raw materials for production, manufacturing process will be
interrupted thus results to losing sales due to customer complaints in the delay of their order. Also, if the
company carried to much goods in their inventory, they will incur carrying costs and/ or have to mark the
inventory down. Both of this are very critical in the production department of a company. One of the
things that the company should do in order to avert the impending crisis is to have an accurate inventory
control and sales forecasting system. The company may also resort to use the perpetual inventory method
to track down the account balance of the inventory to monitor when to order some more inventory so as
not to interrupt the manufacturing process. They can also do periodic physical counts of inventory to
verify the accuracy of their records.
Ordering Unnecessary Items
Purchases should only be made in accordance with general or specific authorization. Goods and
services must not be ordered or availed without authorized purchase requisitions to avoid purchasing
unnecessary goods. Required authorization procedures should be specified in writing and produce in
certain number of copies.
Purchasing Goods of Inferior Quality
This problem can result to costly production delays and can also create scrap and rework costs
that makes materials more expensive than high-quality alternatives. To address this, they should compile
list of approved suppliers known to provide quality goods, they should also review purchase orders to
ensure acquiring of goods from approved and trusted suppliers and they may hold the one who purchase
responsible for the total cost of purchases, including rework and scrap costs so they may be discouraged
not to exercise due diligence in their work
Theft of Inventory
This could really be a big disaster to the company since this would affect the manufacturing
process of the production department due to loss or lack of raw materials inventory. This could also cause
inaccurate records since the inventory on hand would not be the same with the record noted in the books
of the company. However, many controls can be employed to avert the disaster like storing the inventory
acquired in a place where it is secured and only the people who have the authority to enter the place can
proceed so that the others will have a restricted access in the location. They could also do periodic
physical count of inventory and comparison to records more frequently. Segregation of duties can also be
done so that the person who have physical inventory cannot also be the one who keeps the records
Production Cycle

Production
Manager

Raw Materials

Factory Supplies

Inventory Control Finished Goods

Raw materials
and Factory
Supplies

Bakers

Production Cycle
It is the phase in which the raw products and materials remain in the production process, from the
beginning of manufacturing through the output of a finished product. This cycle encompasses the
conversion of raw materials into finished goods for sale and relates directly to the revenue and
expenditure cycles. The major function taken over by this cycle is transformation, usage and holding of
resources.
During this process, the production manager will authorize the requisition of materials from the
stockroom to the production site. The raw materials and all of the related materials for the production
process will be transferred to the control of the bakers. After that, the whole process of producing the
product will occur and until such time that it will be finished, the finished product will be on the hands of
the bakers and it is to be transferred to the stockroom as finished goods. If pending orders are approved,
the goods will be pulled to form the stockroom and will be sent to the production manager for selling. At
the same time, the bookkeeper will have to update the related accounts in the books of the company
basing it on the source documents prepared and verified.
Internal Control System on the Production Cycle
Poor Product Design
This can be a major concern since higher materials purchasing and carrying costs and costs for
inefficient production, repair and warranty costs can emanate from this threat. Controls necessary to avoid
this is to have an accurate data about the relationship between components and finished goods and
analysis of warranty and repair costs to identify primary causes of product failure to be used in re-
designing product.
Over- or Under- Production
Over production may result in excess goods for short-run demand and potential cash flow
problems and obsolete inventory while under production of goods may result to lost sales and customer
dissatisfaction due to unavailable order. To prevent this, the company shul have more accurate production
planning, including accurate and current sales forecast and inventory data. Investment in production
planning could also be one of the cure. Additional control would be the authorization of production orders
and the restriction of access to production scheduling program.
Theft of Inventories and Fixed Assets
Theft of necessary items needed for production can result to loss of sales, misstated financial data
and potential underproduction of inventory. Some controls that can be implemented would be the
restriction of physical access to necessary inventories. Few personnel should only be authorized to enter.
All internal movement of inventory should be documented so as to create source documents and
evidences for further conflicts. Another is to use authorized materials requisition for the release of raw
materials for production in that it should be signed by both inventory control clerk and production
employee to establish accountability. Lastly, proper segregation of duties may be observed in that an
independent party should count inventory and investigate discrepancies for the assets to be identified and
recorded with utmost accuracy.
Disruption of Operations
This could lead to disasters that can disrupt functioning and destroy the assets. To address this,
the company should have backup power sources such as generators and uninterruptible power supplies
subject to cost and benefit analysis. They can also investigate preparedness of key suppliers and identify
alternative sources for critical components.
Theft of Inventory
Only the general manager or any of the partners are allowed to exact or has the authority to send
the specified quantity of raw materials to be used in the production process. This would assure that the
manufacturing process will have an exact ingredient to make a quality finished products. In order to
control inappropriate use of materials, the access to such must be limited to the production personnel only.
Unused materials must be properly stored in cabinets or in the refrigerators or otherwise in the stockroom.
This would then lessen the possibilities of loss or theft of materials.
Production Inconsistencies
To control this, only the qualified bakers are authorized to make the cookies. The bakers are well
trained in such a way that they exercise confidentiality in their profession. This is to guarantee that the
recipe should only be in the knowledge of only a few people and that the recipe is properly followed so as
not to have varying taste of the cookies each time they produce the finished products. In that way, the
bakers are responsible in keeping the original taste of the product.
Erroneous recording
All materials must be properly accounted for in such a way that every time assets are moved,
there should be a source document evidencing its entry and exit within the companys premise. Those
assets that are not used during the day must be kept properly and precisely. Inventory count must be done
more than once and minimal allowance for error in order to assure the accuracy of the quantity left.
Payroll

Employee Bookkeeper

Report to manager and let Attendance Sheet Daily Time Record


DTR be checked 1 1

Production
Manager Verify and check for
discrepancy

Update and verify daily Prepare payroll sheets


time record

Payroll Sheet
Daily Time Record Payroll Sheet 2
1 1

Compare DTR with


attendance sheet Pay Slip Production
Manager
2
Attendance Sheet
2
Attendance Sheet
1 Prepare Pay Slip
File
Employee
Bookkeeper Pay Slip
Payroll Cycle 1
Update books after release
of funds

This process encompasses hiring and terminations, payroll preparation and recording, and the
distribution of payroll checks to employees. Documents affecting payroll cycle include: personnel
records, time cards/DTR and payroll sheets.
During this phase, the employee reports to the production manager and their prepared daily time
records will be checked by the same. The production manager is required to verify the daily time record
with the attendance sheet for any discrepancies or for any fraud done by the employee. Upon checking the
attendance sheets and DTRs, the production manager is required to submit the document to the
bookkeeper with the necessary DTRs attached.
The bookkeeper upon receiving the documents will have to review and check the submitted
papers to ensure that there is no discrepancies. After which, the bookkeeper will have to prepare the
payroll sheet with which the pay of each employee will be based subject to allowable deductions required
to be remitted by the company to appropriate government agencies. The payroll sheet is prepared in two
copies: one for filing and another for approval of the production manager.
The bookkeeper will then prepare a pay slip together with the correct amount of salary enclosed
in an envelope, and send the same to the employees. After the checks are paid to the employees, the
bookkeeper will update the related accounts in the books of the company.
Internal Control System on the Payroll
Hiring unqualified or larcenous employees
This can increase production expenses due to lack of skill and can also cause theft of assets.
Resulting in civil and crime penalties for the companies is also possible if an employee attempts to make
a bribe. Some ways of controlling it is to State skill qualifications for each position explicitly in the
position control report. They can also ask the candidates to sign a statement confirming the accuracy of
the information on their application. The enterprise could also conduct the background checks and verify
skills and references including degrees earned.
Violation of employment law
This can result to stiff and unnecessary expenses like government penalties and fines as well as
civil suits. To nullify this act, the firm should carefully document all actions relating to advertising,
recruiting, hiring new employees, and dismissal of employees, to demonstrate compliance. Providing
employees with continual training to keep them with current employment law can also be one of the
solution.

BUSINESS PAPERS AND FORMS


These are the papers that are used to execute the transactions between the company and a third
party. These are utilized in the actual operations in order to facilitate the recording of transactions that the
company engages into. They serve as a source document evidencing the movement of assets to and from
the companys premise.
Customer Oder Slip

V-CO
Roman Ayson Rd., Brgy. Campo Filipino
Baguio City

CUSTOMER ORDER SLIP

Customer__________________________
No.__________________

Date:________________
DESCRIPTION QUANTITY PRICE TOTAL

Prepared by:___________________________

This document is used to record the order made by the customer. In simple words, it is a
document that confirms a sale and it is generated when a buyer communicates that he wants to purchase a
product. No entries in the journal books are made from sales since theres still no transfer of ownership of
goods from the seller to the customer.
Purchase Requisition

V-CO
Roman Ayson Rd., Brgy. Campo Filipino
Baguio City

PURCHASE REQUISITION

No.__________________
Date: ________________
DESCRIPTION QUANTITY PRICE TOTAL

Date Needed: ___________________________

Prepared by: _____________________


Approved by: ____________________

A form used to request supplies or merchandise or a certain item that falls below a predetermined
minimum quantity or when it is seen that additional quantities should be ordered. The purchasing
department may be requested through a purchase requisition to order items not previously carried in
stock.
Purchase Order

V-CO
Roman Ayson Rd., Brgy. Campo Filipino
Baguio City

PURCHASE ORDER

Vendor____________________________ P. O No.__________________
Address___________________ ________ Date: ________________

DESCRIPTION QUANTITY PRICE TOTAL

Date Needed: ___________________________

Prepared by: _____________________


Approved by: ____________________
Purchase Order is a document made by the production manager upon approval of the purchase
requisitions. Two (2) copies are produced. One copy will be given to the bookkeeper along with the
purchase requisition, and another for the production manager.

Official Receipt

V-CO
Roman Ayson Rd., Brgy. Campo Filipino
Baguio City
OFFICIAL RECEIPT
Sold to:____________________ OR
No._________________
Address:____________________ Date:________________

Received from . the sum of (in words)


.. ( ) in settlement
of the following:
DESCRIPTION QUANTITY PRICE TOTAL

Sr. citizen TIN: Total Sales


OSCA/PWD ID No. Sales Subject to PT
Signature: _______ Exempt Sales
Less: SC/PWD Discount
________________
_ Amount Due
Authorized Signature
Received by: _______________________
THIS DOCUMENT IS NOT VALID FOR CLAIMING INPUT TAX
THIS RECEIPT SHALL BE VALID FOR FIVE (5) YEARS FROM DATE OF ATP.
20 Bklts (50x2) 0001-1000
BIR ATP#OCN4AU0001212122
Date Issued: 12.DEC.17
Valid Until: 12.DEC.22

The official receipt is prepared to document all cash and collections from any source. It is usually
prepared in triplicate, the original is given to the customer, the duplicate to the bookkeeper as a basis in
recording in the books of the company and the triplicate is maintained in the booklet. It is to be noted that
post-dated collections are issued with official receipt only when the check becomes due for encashment.
Daily Time Record
This is a form wherein the employees time of arrival and departure of workers are recorded and
the amount of time spent on each job is monitored. Excellent attendance is an expectation of all
employees of the company. Daily attendance is especially important for hourly employees whose
customers and co-workers have the expectation of on-time services.

Attendance Sheet

V-CO
Roman Ayson Rd., Brgy. Campo Filipino
Baguio City

ATTENDANCE SHEET
Date
EMPLOYEE ID NAME SIGNATURE IN OUT
NO.

Prepared
by:___________________________

This is to monitor the arrival and departure signed by the employee to be compare and verified
from the daily time record. This form should be honestly provided by the employee for this is one of the
basis of an employees net pay. Every manager/supervisor is required to submit attendance sheets of the
employees they supervise. The time cards of the employees must always be attached to the attendance
sheets submitted weekly.

Payroll Register V-CO


Roman Ayson Rd., Brgy. Campo Filipino
Baguio City

PAYROLL REGISTER

NAMES EARNINGS DEDUCTIONS NET PAY


Regular Overtim Others Total Cash Advance
e
A payroll register is the record for a pay period that lists employee hours worked, gross pay, net
pay, deductions, and payroll date. In other words, a payroll register is the document that records all of the
details about employees' payroll during a period.

For the period ended:___________________________


Pay Slip
This is a business note given to an employee when the latter have been paid. it shows the full
amount or net pay of an employee. It also shows the money deducted as tax, pension and government
contributions.
Personnel Records

V-CO
Roman Ayson Rd., Brgy. Campo Filipino
Baguio City

PERSONNEL RECORDS
Employee ID
No.:
Name of
Employee:
Position:
Address:
Contact number:
Email Address:
Salary:
Deductions:
Benefits:
Promotions:
Other
Information:

This is a record kept by the general manager showing the personal information of the employee
together with the employees date of employment, job classification, salary or hourly pay rate,
promotions, payroll deductions, terminations, etc.
Pay Slip

V-CO
Roman Ayson Rd., Brgy. Campo Filipino
Baguio City

PAY SLIP
Date:____________________________
Employee:_______________________
For the period:___________________
Gross Earnings P
XXX
Add: Other Benefits
XXX
TOTAL P XXX
Less: Deductions
Pag-ibig P XXX
SSS P XXX
Philhealth P XXX
Withholding Tax P XXX P
XXX
Net Pay P
XXX
Prepared by: _______________________

It is a note given to an employee when they have been paid, detailing the amount of pay given
and the tax and allowable deductions deducted. This includes the details of the amount of pay given and
tax and insurances deducted from the same. The pay slip is produced in duplicate where one copy is given
to the employee and the other kept by the production manager.

BOOKS OF ACCOUNT
General Journal
General journal or book of original entry is the master journal wherein all company transactions
or journal entries are recorded. A typical general journal has at least five columns: one for the date,
account titles, posting reference, debit, and credit columns. The transactions provided in here are listed
chronologically showing an explanation of each transaction, the accounts affected, whether those
accounts are increased or decreased, and by what amount.
General Ledger
The general Ledger or the book of final entry is a company's set of numbered accounts for
its accounting records. The ledger provides a complete record of financial transactions over the life of the
company. The ledger holds account information that is needed to prepare financial statements and
includes accounts for assets, liabilities, owners' equity, revenues and expenses.
PRO-FORMA FINANCIAL STATEMENTS

V-Co Partnership
Statement of Comprehensive Income
For the Year Ended December 31, 20XX

Sales P XXX
Less: Cost of Goods Sold XXX

Gross Profit P XXX


Less: Operating Expense XXX

Operating Income P XXX


Interest Income XXX

Earnings before income tax P XXX


Less: Income Tax Expense XXX

Net Income P XXX


V-Co Partnership
Statement of Financial Position
As of December 31, 20XX

ASSETS
Current Assets
Cash P XXX
Raw Materials Inventory XXX
Prepaid Expenses XXX

Total Current Assets P XXX


Non-Current Assets
Manufacturing Equipment XXX
Less: Accumulated Depreciation-Manufacturing XXX XXX
Equipment

Furniture and Fixtures P XXX


Less: Accumulated Depreciation-Furniture and Fixtures XXX XXX

Total non-current assets P XXX

Total non-current assets P XXX

TOTAL ASSETS P XXX

LIABILITIES AND PARTNERS EQUITY


Current Liabilities
SSS Payable XXX
Philhealth Payable XXX
PAG-IBIG Payable XXX
Withholding Tax Payable XXX
Income Tax Payable XXX
VAT Payable XXX
Utilities Payable XXX

Total Current Liabilities P XXX

Total Non-Current Liabilities P XXX

TOTAL LIABILITIES P XXX

Partners Equity
Partners Capital XXX
Fangon, Capital XXX
Espejo, Capital XXX
Fetalco, Capital XXX
Lucero, Capital XXX

Padilla, Capital P XXX

Total Partners Capital P XXX

TOTAL LIABILITIES AND PARTNERS CAPITAL P XXX

V-Co Partnership
Statement of Changes in Partners Capital
For the Year Ended December 31, 20XX

Fangon, Capital Beg. P XXX


Add: Share in Net Income XXX

Total P XXX
Less: Drawings XXX

Fangon, Capital End P XXX

Espejo, Capital Beg. P XXX


Add: Share in Net Income XXX

Total P XXX
Less: Drawings XXX

Espejo, Capital End P XXX

Fetalco, Capital Beg. P XXX


Add: Share in Net Income XXX

Total P XXX
Less: Drawings XXX

Fetalco, Capital End P XXX

Lucero, Capital Beg. P XXX


Add: Share in Net Income XXX

Total P XXX
Less: Drawings XXX
Lucero, Capital End P XXX

Padilla, Capital Beg. P XXX


Add: Share in Net Income XXX

Total P XXX
Less: Drawings XXX

Padilla, Capital End P XXX

V-Co Partnership
Statement of Cash Flows
For the Year Ended December 31, 20XX

Net Income P XXX


Depreciation Expense XXX
Adjustments provided by Operating Activities:
Increase in Materials Inventory XXX
Increase in Prepaid Expenses XXX
Increase in SSS Payable XXX
Increase in PhilHealth Payable XXX
Increase in PAG-IBIG Payable XXX
Increase in Withholding Tax XXX
Increase in Income Tax Payable XXX
Increase in VAT Payable XXX
Increase in Utilities Payable XXX
Net Cash Provided by Operating Activities P XXX

Acquisition of Fixed Assets P XXX

Net Cash Provided (Used) by Investing Activities P XXX

Capital Contributions XXX


Additional Investments XXX
Less: Withdrawals XXX

Net Cash Provided (Used) by Financing Activities P XXX

Net Cash Flow P XXX


Cash, Beginning XXX

CASH, ENDING P XXX