DASA EGG WHOLESALE AND RETAIL

A FEASIBILITY STUDY
Presented to
The Research Committee
North Central Mindanao College
Maranding, Lala, Lanao del Norte

In Partial Fulfillment
of the Requirements for the Course
Marketing Elective 4- Feasibility Study
Leading to
Bachelor of Science in Business Administration

Delos Reyes, Jeselda C.

Agada, Maryear Jean Y.
Abne, Karen Claire
Sebuco, Richard

S.Y 2015-2016

1
 Chapter I

INTRODUCTION

Eggs are among the most versatile and nutritious of foods. Alone or as starring

ingredients, eggs, are appropriate for any meal. They contribute high-quality protein

for a relatively low cost. In addition, eggs possess many qualities that make them

indispensable in the kitchen. They add color, flavor, richness, and moisture to baked

items and cooked dishes. They also can be used as binder or thickening agent.

Because of their ability to foam, eggs provide structure in baked goods. Eggs contain

lecithin, a natural emulsifier, so eggs play a key role in dressings and sauces such as

mayonnaise and hollandaise.

Just one egg is packed full of vitamins, minerals, high-quality protein and

antioxidants – all for just 70 calories. Eggs can play an important role in brain

function, eye health, muscle strength, weight management and a whole lot more. And

at just pennies a piece, they’re an affordable and delicious option for meals at any

time of day. Research has shown cognitive benefits to eating breakfast such as

improved memory recall time, improved grades and higher test scores. Research has

also shown that eating breakfast is a sign of overall health and good behavior in

children. Breakfast eaters are less likely to miss school due to illness or other issues

and are less likely to be late to class. And eggs can make you feel more satisfied and

energized throughout the day. At one time, common misconceptions kept many

people from eating eggs, especially those concerned about heart disease. The

cholesterol in eggs was once thought to be detrimental, as it was believed to go

directly to the bloodstream and into the arteries. But this is a myth; for most people,

2
only a small amount of the cholesterol in food passes into the blood. In 2000, the

American Heart Association revised its dietary guidelines and gave a green light for

healthy adults to enjoy eggs (Dexie Egg Company, 2014).

Lala is a vast plain within the Kapatagan Valley, consisting of 14,025 hectares

(34,660 acres) along the coast of Panguil Bay. It is located about 14 kilometres (8.7

mi) from the municipality of Tubod, the seat of the provincial government, and 67.5

kilometres (41.9 mi) southwest of Iligan City, the commercial center of the province.

It is geographically bounded on the northwest by Panguil Bay, on the northeast by the

municipality of Baroy, on the south by the municipality of Kapatagan and on the east

by the municipality of Salvador. Lala is a first class municipality in the province of

Lanao del Norte, Philippines. According to the 2010 census, it has a population of

65,355 people.Most of the commercial establishments are located in Barangay

Maranding, which is now becoming the center of trade, commerce, and education in

the western part of Lanao del Norte. It is also the highest income-generating

municipality in Lanao del Norte.

With these information aforementioned above, the proponents of this

feasibility study come to think of having a business pertaining to egg industry to the

Maranding, Lala, Lanao del Norte. Furthermore, they try to seek viability of the

wholesale and retail of eggs in the proposed location in terms of market, operation

and financial aspect.

3
 Chapter II

EXECUTIVE SUMMARY

A. Type of Business

1. Nature of the Business

The business is a sole proprietorship type of business. The business is a

wholesaler and retailer of raw eggs acquired from the farm of the supplier. Direct

Selling will be done by the business in its proposed location. Selling and pricing of

the raw eggs will vary according to its sizes namely jumbo, extra-large, large,

medium, small, and peewee.

2. Name of the Business

The name of the business will be ‘Dasa Egg Wholesale and Retail’. The term

‘Dasa’ is a Sanskrit word found in ancient Indian texts. It usually means "servant",

however, dasa or das also means a "servant of God", "devotee," "votary" or "one who

has surrendered to God". The term ‘Egg’ is attached to denote that the business Dasa

offers egg for wholesale and retail product.

3. Location of the Business

The location of the business will be in Saavedra, Maranding, Lala, Lanao del

Norte Public Market. Lala is a first class municipality in the province of Lanao del

Norte, Philippines. According to the 2010 census, it has a population of 65,355

people. The population increases each succeeding years making the location being

more diverse. The Maranding, Lala Public Market will probably fit the business egg

4
wholesale and retail business since most people in Maranding, Lala usually buy raw

goods in the public market. The place will be acquired through paying the Goodwill

expense to the previous owner amounting to PHP 20,000.00. Payment of daily basic

tax in the area will be paid through the LGU local officials with the amount of PHP

75.00 per day termed as rent cost. The location is visible to the customers/consumers

of the business since it is located in a populated area. Terminals of buses to north-and-

south-bound are located near the area. There are terminals for El Salvador and

Kapatagan located in the area. People coming from neighboring barangays usually do

buy raw goods in Maranding, Lala Public Market making the place viable for the

proposed business. Its visibility and accessibility will be advantageous for the

business.

The source of the raw eggs will be from M&M Farm in Initao Misamis

Oriental as the business supplier of eggs. The acquisition cost will depend on the

standard sizes of the raw eggs namely jumbo, extra-large, large, medium, small, and

peewee. It will be delivered to the business location.

There are several competitors existing in the area and one of them is the AJ’s

and Rhea’s Farm Products. The products of the competitor are the raw eggs supplied

by Izon Farm and Poultry Supply located in Iligan City. Though they could be a threat

for the proposed business, it will all depend on the promotion and pricing of the

product. The business pricing is a way more affordable for the customers and much

accessible since it is located nearer to the customers than of the competitor’s location.

4. Product/ Service Description

The business as its name will have raw eggs as its product. The business will

offer wholesale and retail business particularly in raw eggs product. It will come to

5
different standard sizes namely the jumbo (30 oz.), large (24 oz.), medium (21 oz.),

and small (18 oz.). It will be delivered from the supplier (M&M Farm) to the business

location (Maranding, Lala, Public Market) for the distribution. Eggs can be sold

wholesale to an egg processor who is responsible for cleaning, sizing, grading

(candling) and packaging the product or these processes can be done by the egg

producer (from supplier). It will be stored on a room temperature not exceeding 40oC

to prevent egg damage. The business will open from Mondays through Sundays for

better business income as it offers customers with very approachable management.

B. Major Assumption and Summary of Findings and Conclusions

a. Market Feasibility

The business name will be ‘Dasa Egg Wholesale and Retail’. M&M Farm

from Initao Misamis Oriental will supply raw eggs to the market location (Maranding,

Lala, Lanao del Norte) of the business. The business will be the wholesaler and

retailer of the raw eggs supplied. Pricing will vary according to the eggs sizes namely

namely jumbo, large, medium, and small.

b. Technical Feasibility

The business will open from 7:00 am to 5:30 pm, Mondays through Sundays.

The management will acquire a space in Maranding, Lala, Lanao del Norte at a cost

of PHP 20,000.00 as Goodwill expense. The management will store its raw eggs in

the location to minimize the transport of goods to the store market area.

c. Financial Feasibility

6
 After considering the critical assets life which is 5 years, the business returns

its investment cost at 220.70%. This is higher than its investment cost hence the

business is worth investing. The business pays back its investment cost within less

than a year. This is less than its investment life of 5 years. Thus, the business is

admirable to pursue. The net income: sales ratio shows an increasing trend of ratio.

This means that the business is growing in succeeding years.

d. Management Feasibility

The business is a sole-proprietorship type of business. The manager will be in-

charge in motivating its employees. The cashier will be in-charge in receiving and

changing of bills to the customers. Salesman/lady will entertain the customer’s choice

of raw eggs and will do the packaging. The management will work as a team to

maintain the stability of the business management quality.

C. Socio-Economic Contribution

The project aims to contribute benefits to the society. It will generate

additional income to the government through paying taxes and in complying the

permits needed in the operation of the business. It will also help increase the supply of

raw eggs in the market. Egg farmers will be benefitted through the increase of

demand and supply of the business.

7
 Chapter III

MARKET STUDY

A. Product to Sell

The business is a wholesaler and retailer of raw eggs. The eggs will be

delivered by the supplier to the market location of the business and will be sold to the

consumers/customers. The egg sizing will be done by the supplier. The business will

also offer deliveries to far distance customers if they will order in bulk. The egg

pricing will vary according to its sizes.

Cost of Raw Eggs from M and M Farm (Supplier)

Particulars Small Medium Large Jumbo

Cost per Piece 3.10 4.00 4.30 5.00
Cost per Tray 93.00 120.00 129.00 150.00

Price of Raw Eggs of the Dasa Egg Wholesale and Retail

Particulars Small Medium Large Jumbo

Price per Piece 4.00 5.00 5.50 6.50
Price per Dozen 48.00 60.00 66.00 78.00
Price per Half Tray 60.00 75.00 82.50 97.50
Price per Tray 120.00 150.00 165.00 195.00

B. Target Market

1. Area Coverage

The area coverage of the business will range from the Kapatagan- Livestock –

Lala Proper – Baroy – Tubod.

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 2. Customers

The target customers of the business will be the retailers of raw eggs in the

different stores in the location and in the neighboring areas such as in Kapatagan,

Baroy, and Tubod including the restaurants, and walk-in customers. The eggs could

be sold to customers with no related allergens against the composition of the raw egg

product.

C. Demand and Supply Analysis

Demand

There are more than 10 bakeries existing in Maranding, Lala, Lanao del Norte.

Less than 5 were big time bakeries. They have their own supplier of raw eggs and

sometimes they do use artificial eggs. However, more than 5 bakeries existing in the

area has a non-consistent supplier of eggs. Hence, they could probably buy raw eggs

through the existing competitor namely AJ’s and Rhea’s Farm Products which is a

wholesaler of raw eggs or buy in bulk in small time retailers. The possibilities of the

proposed business to be patronized by the customers will be an advantage. Thus, the

business could be viable in the market location with its target market.

The proponents conducted survey in the market location with 100 respondents

with ages ranging from 18 to 55 yrs. old. The results of the demand survey are as

follows:

9
 1. Do you buy chicken raw eggs?

No,
14.00%
No. of
Answers Respondents %
Yes 86 86.00%
No 14 14.00%
Total 100 100.00%
Yes,
86.00%

The results above show that out of 100 respondents, 86 or 86% of the

respondents buy raw eggs and 14 or 14% don’t buy raw eggs. Hence, the business

could be viable in the proposed location.

2. How often do you buy chicken raw eggs?

Answers No. of Respondents %

Everyday 35 35.00%
Every other Day 16 16.00%
Once a week 23 23.00%
Once a month 5 5.00%
On Holidays 5 5.00%
On Special Occasions
Only 2 2.00%
Never 14 14.00%
Total 100 100.00%

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 On Special
Occasions Only
Never
2%
14%
On Holidays
5% Everyday
Once a month 35%
5%

Once a week
23%

Every other Day

16%

The results above show how often the respondents bought raw eggs. It shows

that the business will have some adjustments in production of its product.

Additionally, these imply that it has a big fraction that the product will be feasible to

the target consumers who buy raw eggs.

3. How many minimum pieces of raw eggs do you buy?

Answers No. of Respondents %

1 egg 3.00 3.00%
2 to half dozen 27.00 27.00%
1 dozen 19.00 19.00%
Half Tray 8.00 8.00%
1 Tray 16.00 16.00%
More than a tray 13.00 13.00%
Never 14.00 14.00%
Total 100.00 100.00%

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 1 egg
3%

Never
14%
2 to half
More than a dozen
tray 27%
13%

1 Tray
16% 1 dozen
19%

Half Tray
8%

The results above give the business an idea on how much they will produce in

the market area.

Supply

M&M Farm from Initao Misamis Oriental will be the supplier of the business

raw eggs. It will be delivered to the business market location weekly. The Dasa will

be the wholesaler and retailer of raw eggs in Maranding, Lala, Lanao del Norte.

Existing competitor such as AJ’s and Rhea’s Farm Products is also in the area. They

come with different supplier of raw eggs in Izon Farm and Poultry Supply located in

Iligan City. The business considers people at all ages provided they don’t have

allergens against raw eggs composition. The supply will eventually increase as the

demand of the raw eggs increases.

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 D. Projected Sales

Production Volume

Particulars Small Medium Large Jumbo

Per Day
Max. Pieces 550.00 550.00 550.00 550.00
Minimum Pieces 500.00 500.00 500.00 500.00
Total 1,050.00 1,050.00 1,050.00 1,050.00
Average Pieces per Day 525.00 525.00 525.00 525.00
Per Month 15,750.00 15,750.00 15,750.00 15,750.00
Per Year 189,000.00 189,000.00 189,000.00 189,000.00

Projected Sales

Particulars Small Medium Large Jumbo Total

Per Day
Average Pieces per Day 525.00 525.00 525.00 525.00
Price per Piece 4.00 5.00 5.50 6.50
Total Sales Per Day 2,100.00 2,625.00 2,887.50 3,412.50 11,025.00
Sales Per Month 63,000.00 78,750.00 86,625.00 102,375.00 330,750.00
Sales Per Year 756,000.00 945,000.00 1,039,500.00 1,228,500.00 3,969,000.00

13
 E. Marketing Program

1. Practices of the Competitors

Product

Competitor: AJ’s and Rhea’s Farm Products

The products of the competitor are the raw eggs supplied by Izon Farm and

Poultry Supply located in Iligan City.

Price

The price of the raw eggs depends on the standard size of the raw eggs. Below

shows the pricing of the competitor:

Particulars Small Medium Large

Per pieces 5.00 5.50 6.00
Per dozen 60.00 65.00 70.00
Per Half tray 73.00 78.00 83.00
Per Tray 145.00 155.00 165.00

Promotion

The business promotion is through information flyers. They don’t do much in

promoting their product. They oftentimes open their store very late. The service is

slow. Customers will not be catered directly. They often wait several minutes or even

by hours before they will be catered by the management.

14
Distribution

Figure 1. Distribution Channel of the Competitor

Izon Farm and Poultry • Raw Egg Supplier

Supply

AJ’s and Rhea’s Farm • Raw Egg Wholesaler

Products

Consumers/Customers
• Buyer of
Raw Eggs

2. Own Marketing Program

Product

Business Name: Dasa Egg Wholesale and Retail

The business product will be the raw eggs supplied from M&M Farm in Initao

Mis. Oriental. These are fresh eggs delivered to the market location. It comes with

different sizes namely: Jumbo, large, medium, and small.

Price

The pricing of the raw eggs vary on its standard sizes. Below shows the

pricing of the raw eggs:

Pricing of Raw Eggs to be Sold

15
 Particulars Small Medium Large Jumbo
Price per Piece 4.00 5.00 5.50 6.50
Price per Dozen 48.00 60.00 66.00 78.00
Price per Half Tray 60.00 75.00 82.50 97.50
Price per Tray 120.00 150.00 165.00 195.00

Promotion

The business will use informational flyers and tarpaulins in promoting its

product. Small billboard will be installed in the store head board with the business

name and logo. The business will maintain good relationship and will offer fast

service to the customer. Customers’ choice will be immediately catered.

Distribution

The customer of the business will come into the store and pick-up their raw

eggs. If the customer (walk-in customers) will purchase in bulk, the manager decision

choice to deliver will depend on the amount of eggs to be delivered or amount of

orders of egg to be delivered. The distribution channel of the business was shown

below.

Figure 2. Distribution Channel of the Business

Wholesaler/Retailer
•M&M Farm •Customer/s
•Product: Raw Eggs •DASA EGG
WHOLESALE AND
RETAIL
•Product: Raw Eggs
Supplier Buyer

16
 Chapter IV

OPERATION PLAN

A. Technical Production Description

The business will do Wholesale and Retail business in its market location. The

business will sell raw eggs in different standard sizes namely: small, medium, large

and jumbo. Prices of the eggs depend on its standard size. Customers will come to the

store to buy and pick-up their raw eggs. Acquisition of the raw eggs will be delivered

by the supplier to the business store upon order. The egg sizing will be done by the

supplier. The egg pricing will vary according to its sizes.

Composition: A whole egg consists primarily of a yolk, a white, and a shell. In

addition, it contains a membrane that lines the shell and forms an air cell at the large

end, and two white strands called chalazae that hold the yolk centered.

B. Production Schedule

The business will open from 7:00 am to 5:30 pm, Mondays through Sundays.

The production volume of the raw eggs sold per day, month and year.

Production Volume

Particulars Small Medium Large Jumbo

Per Day
Max. Pieces 550.00 550.00 550.00 550.00
Minimum Pieces 500.00 500.00 500.00 500.00
Total 1,050.00 1,050.00 1,050.00 1,050.00
Average Pieces per Day 525.00 525.00 525.00 525.00
Per Month 15,750.00 15,750.00 15,750.00 15,750.00
Per Year 189,000.00 189,000.00 189,000.00 189,000.00

17
 C. Operation Process

Figure 4. Operation Process

Labor: 1
Equipment: personal celphone
Contact the suplier of raw eggs for deliver. Delivery of the raw eggs is free of charge from the supplier. The
frequency of delivery will be once per week.
Duration: 3 minutes (for call) (4 hrs for delivery once per week)

Labor: 1
Equipment: tray/ plastic
Entertaining Customer Order. Packing the raw eggs.
Duration: 3 minutes

Labor: 1
Equipment: calculator
Calculating sold raw eggs.
Duration: 30 seconds

Labor: 1
Equipment:
Recieving and changing payments; giving or raw eggs to the customer/s.
Duration: 50 seconds

D. Labor Requirement

Personnel Employment Base Quantity

Manager Permanent 1
Cashier Permanent 1
Driver Permanent 1
Salesman/lady Permanent 1

E. Tools, Machinery and Equipment Requirement

Annual
Particulars Specification EUL Qty. Unit Cost Total Cost Dep.
Water ACL, Cold water only;
Dispenser 30.5 x 36 x 42cm. 5 1 1,200.00 1,200.00 240.00
Processor: Intel Dual Core
Computer DDR3
10 1 15,300.00 15,300.00 1,530.00
Set Arc 722m and 403D
mobile and tablet

18
 Motherboard: 1800B-ITX
series Solid Capacitor for
CPU power
Memory: 2GB DDR3
memory
Hard Drive: 500GB
SATA hard drive
Graphics: Built-in Intel®
7th generation (Gen 7)
graphics, Output Options :
D-Sub, HDMI
Monitor: 15.6" LED
monitor
Samsung LED TV
Television 32H4100 10 1 13,000.00 13,000.00 1,300.00
Calculator Casio 5 3 350.00 1,050.00 210.00
High quality Stainless
Steel and Plastic material
Chrome plated
Tray Dishwasher safe 10 1 150.00 150.00 15.00
With plastic drip tray
Size: 50cm x 17.5cm x
30.5cm
Specifications Table:
Resistant to sudden
temperature change
Color:Clear
Glass Main material:Crystal 5 12 20.00 240.00 48.00
Clear Glass
Size (L x W x H cm)4.6 x
3.6 x 5.8
Weight (0.91kg)
Total 30,940.00 3,343.00

Particulars EUL Description Total Cost Annual Dep.

Suzuki; fully-
Multicab conditioned;
10 secondhand multicab 125,000.00 12,500.00
Total 125,000.00 12,500.00

19
 F. Raw Material

Particulars Small Medium Large Jumbo Total Cost

Per Day
No. of Pieces per Day 525.00 525.00 525.00 525.00
Cost per Piece 3.10 4.00 4.30 5.00
Cost per Day 1,627.50 2,100.00 2,257.50 2,625.00 8,610.00
Cost per Month 48,825.00 63,000.00 67,725.00 78,750.00 258,300.00
Cost per Year 585,900.00 756,000.00 812,700.00 945,000.00 3,099,600.00

20
G. Plant/factory Layout

21
H. Location Map

22
 I. Waste Disposal System

The business will have 2 separate garbage containers for possible wastes of the

management. As per Provincial ordinance, there must be separate containers for

biodegradable and non-biodegradable waste products. Waste such as papers, damage

trays could be classified as biodegradable waste products. The plastics will be

classified as non-biodegradable waste products. The garbage collectors from LGU

will collect these wastes weekly.

J. Utilities

Electricity and water supply is pre-installed in the business location.

Electricity will be paid to LANECO monthly and the water cost will be paid in

NAWASA monthly.

K. Quality Control

QUALITY CRITERIA

Quality determines the acceptability of a product to potential customers. The quality

of eggs and their stability during storage are largely determined by their physical

structure and chemical composition. It is important therefore that those concerned

with the handling of eggs are knowledgeable about this information in order to

understand why eggs need to be treated in specific ways and to have a rational basis

for day-to-day marketing decisions.

Composition and attributes of eggs

An egg consists of shell, membrane, albumen or white and yolk.

Nutritional value

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 Eggs are a good source of high quality protein. They provide important

sources of iron, vitamins and phosphorus. As a nutritional source of vitamin D, eggs

rank second only to fish liver oils. Eggs are low in calcium, which is discarded in the

shell, and contain very little vitamin C.

Eggs provide a unique and well-balanced source of nutrients for persons of all

ages. Hard-cooked egg yolks are of great nutritional value as a major supplementary

source of iron for infants. When children reach one year of age they may also be

given egg whites. Eggs contain significant nutritional value, which is essential during

rapid body growth, and therefore are excellent food for young children and teenagers.

Low caloric value, ease of digestibility and high nutrient content make eggs

valuable in many therapeutic diets for adults. During convalescence, when bland diets

may be required, eggs provide a good nutritious diet. For older people, whose caloric

needs are lower, eggs are an easy, inexpensive and nutritious food to prepare and eat.

Availability, modest cost, ease of preparation, popular taste appeal and low caloric

value give eggs a primary advantage for human nutritional needs.

Shell quality: texture, colour, shape and condition

Shell quality characteristics that must be considered are as follows:

Cleanliness

soundness (unbroken)

smoothness

shape

The two most desirable shell qualities, cleanliness and soundness, are largely

controlled by the production and handling of eggs. Eggs with shell defects should be

24
removed from eggs destined to the retail trade. Clearly, consumers have adverse

reactions to cracked or dirty eggs. Even if the cracks in an egg are only visible when

candling, the micro-cracks may have serious consequences on quality. These eggs

may be sold locally and possibly only a few hours after lay.

When the membrane is broken as well as the shell, the contents of the eggs can

leak, and therefore the only practicable market outlet is sale as egg pulp. If the eggs

are dirty, for example, with blood or feces, consumers will react unfavorably to them.

Although shell colour is no indication of quality, consumers in some markets may

prefer white eggs or brown eggs. In such circumstances, it is advisable to sort eggs by

shell colour.

Measures to prevent deterioration during marketing

Eggs should never be left standing in the sun or in a room that gets very hot at

some point in the day, but should be moved into shaded, well-ventilated rooms and

underground cellars as quickly as possible.

SIZE

Determined by weight per dozen; Jumbo, extra-large, large, medium, small,

and peewee.

PACKAGING OF SHELL EGGS

Nature has given the egg a natural package – the shell. Despite its relative

strength, the egg is an extremely fragile product and even with the best handling

methods, serious losses can result from shell damage. Economical marketing

generally requires that eggs be protected by the adoption of specialized packaging and

handling procedures.

25
Functions of packaging

Packaging is an important component in delivering quality eggs to buyers. It

embraces both the art and science of preparing products for storage, transport and

eventually sale. Packaging protects the eggs from:

micro-organisms, such as bacteria;

natural predators;

loss of moisture;

tainting;

temperatures that cause deterioration; and

Possible crushing while being handled stored or transported.

Proper handling and storage help control moisture loss, but appropriate

packaging may also help prevent it. Eggs also need to breathe, hence the packaging

material used must allow for the entrance of oxygen. The material used must be clean

and odorless so as to prevent possible contamination and tainting. Authentic egg

packaging materials can be reused, but careful attention must be paid to possible

damage, odors and cleanliness. The packaging must be made to withstand handling,

storage and transport methods of the most diverse kind and to protect the eggs against

temperatures that cause deterioration and humidity.

26
 Chapter V

ORGANIZATIONAL PLAN

A. Legal Form of Business

The form of ownership is a sole proprietorship. The amount of the initial

investment is provided by the proponents. The business name is ‘Dasa Egg Wholesale

and Retail’. It offers raw eggs as its product. All profits shall be at the proponent’s

benefits and all losses shall be at the proponent`s risk. In order to start the business,

legal forms must be done. Samples were shown in the next pages.

Sample Only!!!

27
 B. Organizational Structure

Manager

Cashier Salesman/lady

Figure 5. Organizational Chart of the Proposed Business

Functions:

Manager

- Monitors the business profitability

- Motivates employees on daily operations

- Seeks further improvement for business development

Cashier

- In-charge in cash disbursements and receives cash related to business

operation

- In-charge in making vouchers and receipts

Salesman/lady

- Entertains customer/s order and Packing raw eggs

- Maintains cleanliness in the area

28
 C. Qualifications of Officers

Total
Salary per Monthly Annual
Personnel Qualifications Personnel Salary Salary Benefits
Graduate of Marketing
Management; 20-25 yrs
old; flexible; expert in SSS and
1 handling business PhilHealth
Manager transactions 9,500.00 9,500.00 114,000.00 Contribution
Graduate of Marketing SSS and
Management; 20-25 yrs PhilHealth
1 Cashier old; should female; 9,500.00 9,500.00 114,000.00 Contribution
Graduate of Marketing
Management; must be
male; physically fit, SSS and
knows how to drive and PhilHealth
1 Driver have driver's license 9,500.00 9,500.00 114,000.00 Contribution
Graduate of Marketing
1 Management; 20-25 yrs SSS and
Salesman old; approachable; can PhilHealth
/lady work under pressure 9,500.00 9,500.00 114,000.00 Contribution
Total 38,000.00 456,000.00

D. GANTT Chart of Activities

Month 1 Month 2
Particulars
1 2 3 4 1 2 3 4
Acquisition of Capital
Completion of Legal Forms
Acquisition of the Equipment and Multicab
Plant Renovation.
Promotion of the business.
Start of the Business

29
 E. Administrative Expenses

Particulars Per Month Payment Per Year Payment

Salary and Wages 38,000.00
SSS Contribution 760.00
PhilHealth Contribution 760.00
Utilities 1,300.00
Permits and Licenses 3,100.00
Rent Expense 2,250.00
Fire Insurance 1,500.00
Fire Extinguisher 840.00
Total 43,070.00 5,440.00

30
 Chapter VI

FINANCIAL STUDY

A. Total Project Cost

Schedule 1. Total Project Cost

Particulars Equity Total Cost

Fixed Assets
Tools, Machinery and Equipment 30,940.00
Plant Renovation 5,000.00
Multicab 125,000.00
Furniture and Fixtures 8,875.00
Sub-total 169,815.00
Working Capital:
Permits and Licenses 3,100.00
Labor Cost 1,500.00
Miscellaneous Expense 1,500.00
Transportation Cost 4,000.00
Sub-total 10,100.00
Total Project Cost 179,915.00

B. Source of Financing

The owners of the business will invest money with a total of PHP 200, 000.00

cash on hand as an initial capital of the business.

31
 C. Projected Financial Statement
a. Project Cash Flow Statement

Particulars Pre-operation Year 1 Year 2 Year 3 Year 4 Year 5

Cash Inflows
Sales 0.00 3,969,000.00 4,167,450.00 4,375,822.50 4,594,613.63 4,824,344.31
Add. Investments 200,000.00 0.00 0.00 0.00 0.00 0.00
Total Cash Inflows 200,000.00 3,969,000.00 4,167,450.00 4,375,822.50 4,594,613.63 4,824,344.31
Cash Outflows
Acquisition of Fixed Assets 169,815.00 0.00 0.00 0.00 0.00 0.00
Cost of Raw Materials 0.00 3,099,600.00 3,161,592.00 3,224,823.84 3,289,320.32 3,355,106.72
Cost of Supplies 0.00 1,364.00 1,364.00 1,364.00 1,364.00 1,364.00
Packaging Cost 0.00 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00
Multicab Registration 0.00 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00
Repair and Maintenance 0.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00
Administrative Expense 3,100.00 519,180.00 522,077.00 522,395.24 522,719.84 523,050.94
Goodwill Expense 0.00 20,000.00 0.00 0.00 0.00 0.00
Miscellaneous Expense 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00
Promotional Expense 0.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
Transportation Cost 4,000.00 48,000.00 48,960.00 49,939.20 50,937.98 51,956.74
Labor Cost 1,500.00 0.00 0.00 0.00 0.00 0.00
Tax Due 0.00 43,730.93 91,287.41 135,069.74 184,020.54 236,050.76
Total Cash Outflows 179,915.00 3,759,374.93 3,852,780.41 3,961,092.02 4,075,862.69 4,195,029.16
Net Cash Flow 20,085.00 209,625.07 314,669.59 414,730.48 518,750.94 629,315.14
Cash Balance, Beg. 0.00 20,085.00 229,710.07 544,379.66 959,110.14 1,477,861.08
Cash Balance, End 20,085.00 229,710.07 544,379.66 959,110.14 1,477,861.08 2,107,176.22

32
 b. Project Income Statement

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Sales 3,969,000.00 4,167,450.00 4,375,822.50 4,594,613.63 4,824,344.31
Less:
Cost of Raw Materials 3,099,600.00 3,161,592.00 3,224,823.84 3,289,320.32 3,355,106.72
Cost of Supplies 1,364.00 1,364.00 1,364.00 1,364.00 1,364.00
Administrative Expense 522,280.00 522,077.00 522,395.24 522,719.84 523,050.94
Multicab Registration 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00
Repair and Maintenance 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00
Goodwill Expense 20,000.00 0.00 0.00 0.00 0.00
Miscellaneous Expense 3,000.00 1,500.00 1,500.00 1,500.00 1,500.00
Packaging Cost 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00
Promotional Expense 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
Depreciation Expense 18,332.29 18,332.29 18,332.29 18,332.29 18,332.29
Transportation Cost 52,000.00 48,960.00 49,939.20 50,937.98 51,956.74
Labor Cost 1,500.00 0.00 0.00 0.00 0.00
Sub-total 3,744,076.29 3,779,825.29 3,844,354.57 3,910,174.43 3,977,310.69
Gross Operating Profit 224,923.71 387,624.71 531,467.93 684,439.19 847,033.61
Less: Tax Due 43,730.93 91,287.41 135,069.74 184,020.54 236,050.76
Net Income 181,192.79 296,337.30 396,398.20 500,418.65 610,982.86

33
 c. Project Balance Sheet

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Assets
Current Assets
Cash 229,710.07 544,379.66 959,110.14 1,477,861.08 2,107,176.22
Total Current Assets 229,710.07 544,379.66 959,110.14 1,477,861.08 2,107,176.22
Non-Current Assets
Tools, Machinery and Equipment 30,940.00 30,940.00 30,940.00 30,940.00 30,940.00
Multicab 125,000.00 125,000.00 125,000.00 125,000.00 125,000.00
Plant Renovation 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00
Furniture and Fixtures 8,875.00 8,875.00 8,875.00 8,875.00 8,875.00
Total 169,815.00 169,815.00 169,815.00 169,815.00 169,815.00
Less: Accumulated Depreciation 18,332.29 36,664.57 54,996.86 73,329.14 91,661.43
Total Non-Current Assets 151,482.71 133,150.43 114,818.14 96,485.86 78,153.57
Total Assets 381,192.79 677,530.09 1,073,928.28 1,574,346.93 2,185,329.79
Liabilities and Owner's Equity
Liabilities
Accounts Payable 0.00 0.00 0.00 0.00 0.00
Total Liabilities 0.00 0.00 0.00 0.00 0.00
Owner's Equity
Capital, Beg. 200,000.00 381,192.79 677,530.09 1,073,928.28 1,574,346.93
Add: Net Income 181,192.79 296,337.30 396,398.20 500,418.65 610,982.86
Capital, End 381,192.79 677,530.09 1,073,928.28 1,574,346.93 2,185,329.79
Total Liabilities and Owner's Equity 381,192.79 677,530.09 1,073,928.28 1,574,346.93 2,185,329.79

34
 D. Profitability Indices

a. Return on Investment

Return on Investment=Ave. Annual Net Income/Total Investments X 100%

Year Net Income

1 181,192.79

2 296,337.30

3 396,398.20

4 500,418.65

5 610,982.86

Total Net Income 1,985,329.79

Divided by Critical Asset Life 5

Average Net Income 397,065.96

Total Project Cost 179,915.00

Return on Investment 220.70%

After considering the critical assets life which is 5 years, the business returns

its investment cost at 220.70%. This is higher than its investment cost hence the

business is worth investing.

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 b. Payback Period

Cumulative Payback
Net Income+
Year Total Period
Depreciation
1 199,525.07 199,525.07 1
2 314,669.59 514,194.66
3 414,730.48 928,925.14
4 518,750.94 1,447,676.08
5 629,315.14 2,076,991.22
Total Project Cost 179,915.00
Less Cumulative
Total where investment 199,525.07
is to be recovered
Total amount to be recovered -19,610.07
Divided by Net Income+Dep.
Where the investment is 199,525.07
recovered
Quotient -0.098283746
Years
Months(Multiplied by 12) -1.179404951 -1
Payback Period Less than a year

The business pays back its investment cost within less than a year. This is less

than its investment life of 5 years. Thus, the business is admirable to pursue.

36
 c. Net Income: Sales Ratio

12.66%
10.89%

9.06%

7.11%

4.57%

Year 1 Year 2 Year 3 Year 4 Year 5

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Net Income 181,192.79 296,337.30 396,398.20 500,418.65 610,982.86
3,969,000. 4,167,450. 4,375,822. 4,594,613. 4,824,344.
Gross Sales
00 00 50 63 31
Net Income
4.57% 7.11% 9.06% 10.89% 12.66%
Rate

The net income: sales ratio shows an increasing trend of ratio. This means that

the business is growing in succeeding years.

37
 E. List of Assumption Used

Assumptions:

The initial capital invested in the business is amounting to PHP200,000.00

The Promotional Expense is worth PHP 2,000.00 annually

The utilities cost will increase by 2% annually

The Packaging Cost is worth PHP 12,000.00 annually.

The Miscellaneous Expense is worth PHP1, 500.00 annually.

The delivery from supplier is free of charge and will have once a week

frequency of delivery

The raw materials costs are increased by 2% annually.

The sales increases by 5% annually

Transportation cost is worth PHP 48,000.00 on year 1 and increases by 2% on

succeeding years

Formula used in depreciation expense is below:

Cost − Salvage Value

Depreciation =
Life in Number of Periods

38
 F. Schedule

Schedule 2. Permits and Licenses

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Business Permit 2,450.00 2,450.00 2,450.00 2,450.00 2,450.00
DTI Registration 515 0 0 0 0
Cedula 75 75 75 75 75
Purok Clearance 10 10 10 10 10
Barangay Clearance 50 50 50 50 50
Total 3,100.00 2,585.00 2,585.00 2,585.00 2,585.00

Schedule 2.1 Business Permit

Particulars Amount
Billboard Fee 250
Sanitary Fee 300
Municipal ecology 300
Mayor's Permit 500
Weight and Measure 50
Zoning Fee 50
Basic Tax Clearance 1,000.00
Total 2,450.00

Schedule 3. Utilities

Particulars Per Month Year 1 Year 2 Year 3 Year 4 Year 5

Electricity 1,000.00 12,000.00 12,240.00 12,484.80 12,734.50 12,989.19
Water 300.00 3,600.00 3,672.00 3,745.44 3,820.35 3,896.76
Total 1,300.00 15,600.00 15,912.00 16,230.24 16,554.84 16,885.94

Schedule 4. Rent Expense

Particulars Per Month Per Year

Rent Expense 2,250.00 27,000.00

39
Schedule 5. Salary and Wages

Personnel Per Month Per Year

1 Manager 9,500.00 114,000.00
1 Cashier 9,500.00 114,000.00
1 Driver 9,500.00 114,000.00
1 Salesman/lady 9,500.00 114,000.00
Total 38,000.00 456,000.00

Schedule 6. Administrative Expense

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Salary and Wages 456,000.00 456,000.00 456,000.00 456,000.00 456,000.00
SSS Contribution 9,120.00 9,120.00 9,120.00 9,120.00 9,120.00
PhilHealth Contribution 9,120.00 9,120.00 9,120.00 9,120.00 9,120.00
Utilities 15,600.00 15,912.00 16,230.24 16,554.84 16,885.94
Permits and Licenses 3,100.00 2,585.00 2,585.00 2,585.00 2,585.00
Rent Expense 27,000.00 27,000.00 27,000.00 27,000.00 27,000.00
Fire Insurance 1,500.00 1,500.00 1,500.00 1,500.00 1,500.00
Fire Extinguisher 840.00 840.00 840.00 840.00 840.00
Total 522,280.00 522,077.00 522,395.24 522,719.84 523,050.94

Schedule 7. Cost of Supplies

Particulars Quantity Unit Unit Cost Total Cost

Office Supplies
Record Book 6 Item 85.00 510.00
Ballpen 12 Item 11.00 132.00
Correction Fluid 3 Item 14.00 42.00
Total Office Supplies 684.00
Cleaning Supplies
Waste can 2 Item 160.00 320.00
Broom 2 Item 130.00 260.00
Dustpan 2 Item 50.00 100.00
Total Cleaning Supplies 680.00
TOTAL SUPPLIES 1,364.00

40
Schedule 8. Tools, Machinery and Equipment

Particulars EUL Qty. Unit Cost Total Cost Annual Dep.

Water Dispenser 5 1 1,200.00 1,200.00 240.00
Computer Set 10 1 15,300.00 15,300.00 1,530.00
Television 10 1 13,000.00 13,000.00 1,300.00
Calculator 5 3 350.00 1,050.00 210.00
Tray 10 1 150.00 150.00 15.00
Glass 5 12 20.00 240.00 48.00
Total 30,940.00 3,343.00

Schedule 9. Furniture and Fixtures

Unit Estimated Useful Total Annual

Particulars Cost Quantity Life Cost Dep.
Monoblock
Chair 175.00 5 5 875.00 175.00
Wooden Table 2,500.00 2 5 5,000.00 1,000.00
Filing Cabinet 3,000.00 1 5 3,000.00 600.00
Total 8,875.00 1,775.00

Schedule 10. Multicab

Particulars EUL Description Total Cost Annual Dep.

Suzuki; fully-conditioned;
Multicab
10 secondhand multicab 125,000.00 12,500.00
Total 125,000.00 12,500.00

Schedule 11. Plant Renovation Annual Dep.

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Plant Renovation 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00
Total Cost 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00
Residual Value 0.00 714.29 1,428.57 2,142.86 2,857.14
Life in Number of Periods 7 6 5 4 3
Annual Depreciation 714.29 714.29 714.29 714.29 714.29

41
Schedule 12. Total Annual Depreciation Cost

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Tools, Machinery and Equipment 3,343.00 3,343.00 3,343.00 3,343.00 3,343.00
Plant Renovation 714.29 714.29 714.29 714.29 714.29
Multicab 12,500.00 12,500.00 12,500.00 12,500.00 12,500.00
Furniture and Fixtures 1,775.00 1,775.00 1,775.00 1,775.00 1,775.00
Total Annual Depreciation 18,332.29 18,332.29 18,332.29 18,332.29 18,332.29

Schedule 13. Accumulated Depreciation

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Accumulated Depreciation 18,332.29 36,664.57 54,996.86 73,329.14 91,661.43

Schedule 14. Cost of Raw Eggs from M and M Farm (Supplier)

Particulars Small Medium Large Jumbo

Cost per Piece 3.10 4.00 4.30 5.00
Cost per Tray 93.00 120.00 129.00 150.00

Schedule 15. Price of Raw Eggs of the Dasa Egg Wholesale and Retail

Particulars Small Medium Large Jumbo

Price per Piece 4.00 5.00 5.50 6.50
Price per Dozen 48.00 60.00 66.00 78.00
Price per Half Tray 60.00 75.00 82.50 97.50
Price per Tray 120.00 150.00 165.00 195.00

Schedule 16. Cost of Raw Materials Purchased

Particulars Small Medium Large Jumbo Total Cost

Per Day
No. of Pieces per Day 525.00 525.00 525.00 525.00
Cost per Piece 3.10 4.00 4.30 5.00
Cost per Day 1,627.50 2,100.00 2,257.50 2,625.00 8,610.00
Cost per Month 48,825.00 63,000.00 67,725.00 78,750.00 258,300.00
Cost per Year 585,900.00 756,000.00 812,700.00 945,000.00 3,099,600.00

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Schedule 17. Annual Cost of Raw Materials

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Raw Materials 3,099,600.00 3,161,592.00 3,224,823.84 3,289,320.32 3,355,106.72

Schedule 18. Production Volume

Particulars Small Medium Large Jumbo

Per Day
Max. Pieces 550.00 550.00 550.00 550.00
Minimum Pieces 500.00 500.00 500.00 500.00
Total 1,050.00 1,050.00 1,050.00 1,050.00
Average Pieces per Day 525.00 525.00 525.00 525.00
Per Month 15,750.00 15,750.00 15,750.00 15,750.00
Per Year 189,000.00 189,000.00 189,000.00 189,000.00

Schedule 19. Projected Sales

Particulars Small Medium Large Jumbo Total

Per Day
Average Pieces per
Day 525.00 525.00 525.00 525.00
Price per Piece 4.00 5.00 5.50 6.50
Total Sales Per Day 2,100.00 2,625.00 2,887.50 3,412.50 11,025.00
63,000.0 78,750.0
Sales Per Month 0 0 86,625.00 102,375.00 330,750.00
756,000. 945,000. 1,039,500. 1,228,500. 3,969,000.
Sales Per Year 00 00 00 00 00

Schedule 20. Annual Projected Sales

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Sales 3,969,000.00 4,167,450.00 4,375,822.50 4,594,613.63 4,824,344.31

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Schedule 21. BIR Policy for Individual Taxpayers

If Taxable Income is: Tax Due is

Not over 10, 000.00
Over 10, 000.00 but not over 30,000.00
Over 30,000.00 but not over 70,000.00
Over 70,000.00 but not over 140,000.00
Over 140,000.00 but not over 250,000.00
Over 250,000.00 but not over 500,000.00
Over 500,000.00
5%
500+10% of the excess over 10,000
2,500+15% of the excess over 30,000
8,500+20% of the excess over 70,000
22,500+25% of the excess over 140,000
50,000+30% of the excess over 250,000
125,000+32% of the excess over 500,000

Schedule 22. Tax Due

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Income Before Tax 224,923.71 387,624.71 531,467.93 684,439.19 847,033.61
Less: Basic Amount 140,000.00 250,000.00 500,000.00 500,000.00 500,000.00
Excess 84,923.71 137,624.71 31,467.93 184,439.19 347,033.61
Multiply: Tax Percentage 0.25 0.3 0.32 0.32 0.32
Sub-Total 21,230.93 41,287.41 10,069.74 59,020.54 111,050.76
Add: Basic Tax 22,500.00 50,000.00 125,000.00 125,000.00 125,000.00
Income Tax Due 43,730.93 91,287.41 135,069.74 184,020.54 236,050.76

Schedule 23. Multicab Registration

Particulars Cost
Registration 5,250.00
Emmission Test 550.00
Insurance 1,200.00
Total 7,000.00

Schedule 24. Transportation Cost

Cost of gasoline Amount

Weekly 1,000.00
Monthly 4,000.00
Yearly 48,000.00

44
Schedule 25. Remaining Cost of Assets After 5 years (Tools, Machinery and

Equipment

Particulars Cost Scrap Value

Water Dispenser 0.00 1,200.00
Computer Set 7,650.00 7,650.00
Television 6,500.00 6,500.00
Calculator 0.00 1,050.00
Tray 75.00 75.00
Glass 0.00 240.00
Total 14,225.00 16,715.00

45
Calendar of Delivery

LOCATION Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Delivery from the
supplier: M&M Farm
(free of delivery Direct Direct Direct Direct
charge) Direct Selling Direct Selling Selling Selling Selling Selling
Delivery to Butadon,
Market Delivery to Sapad, Kapatagan, Lanao
Location Direct Selling Lanao del Norte del Norte
(particular location:
Poblacion, Lower (Particular Location:
Sapad) P-1, P-4, P-5)
Volume to deliver: Volume to deliver:
Minimum of 15 trays. Minimum of 15 trays.

46