3.

5 People

A process is a work flow of a raw material into useful product. Therefore, this process
required a raw idea to begin with and it transform into an innovative idea which is being is
being done and supported by the people of the organisation. In the Air Six enterprise, all
members took part in generating the product, cobweb duster.

At first stage, all members had given their idea to be innovated into product. However,
Amira idea was chosen as our company’s source of innovation idea because the objective is
generated a more effective and lighter cobweb duster for the housewife groups.

Second stage, all the community member will be discussing regarding the raw idea on
how to make it become innovative and can be commercialised. Therefore, Farah and Marvell
were appointed to record all the discussions and make evaluation of the ideas whether it is
suitable or not for the housewife groups and suggest improvement based on their study
regarding the subject.

Third stage, Iqbal and Amar will be working on designing the cobweb duster based on
the discussion done among the members. The product will be designed to meet the objective
requirement. Then, prototype will be developed at the beginning and will be improve it
performance to become the most effective before transform into a complete product and be
commercialised.
3.6 Process

Start designing List down the Planning the

cobweb duster required items budget expenses

Do modification to
Test effectiveness Start constructing
maximise the
of cobweb duster cobweb duster
design function

For the first step of process, we started designing the cobweb duster to entrap the
cobweb buster by using the electrostatic charge theory where the cobweb has negative
electrostatic charge and the motor will produce positive electrostatic charge. The main
compartment for the design is using a full circuit motor and a 2-meter pole.

The main item to produce the cobweb duster is motor, battery, battery holder, 2-meter
pole, switch, wire connector and metal rod. For the budget, we will try to minimise the cost and
try to use good condition recycle material as to produce the cobweb buster.

The construction of the cobweb spider will start with the motor circuit as to test out the
suitable type of motor to entrap the cobweb. The motor needed to be tested which is the best
between 12V motor or 24V motor. Next step, is apply the motor circuit into the pole by
attaching the motor at one end of the pole and the battery and the switch at the other end of
pole.

The next step is to test effectiveness of its durability and how much the metal rod can
entrap the cobweb. Then, modification will be done to improve and maximise the performance
of the product.
5.0 Financial plan

5.1 Sales forecast year 2011

Month Units Sales collection

(RM)
January 900 27,000
February 900 27,000
March 900 27,000
April 900 27,000
May 900 27,000
June 900 27,000
July 900 27,000
August 900 27,000
September 900 27,000
October 900 27,000
November 900 27,000
December 900 27,000
TOTAL 10,800 324,000
Price per unit = RM30

5.2. Project Implementation Cost Scheme

Description RM RM

Capital Expenditure
Building 35,000
Machinery & Equipment 25,000
Furniture & Fixtures 12,500
Van 20,000
92,500
Working Capital (1 month)
Administrative 15,000
Marketing 3,000
Operation 6,000
24,000
Pre-operational Costs 3,000
Deposits 1,000
Grand Total 120,500
Allowance for contingencies (10%) 12,050

TOTAL COST 132,550

5.3 Depreciation

5.3.1 Building

Type of asset : Building

Cost of asset : RM 35,000

Economic life : 10 years

Method : Straight line

YEAR ANNUAL ACCUMULATED BOOK VALUE

DEPRECIATION DEPRECIATION
0 40,000
1 3,500 3,500 31,500
2 3,500 7,000 28,000
3 3,500 10,500 24,500
4 3,500 14,000 21,000
5 3,500 17,500 17,500
6 3,500 21,000 14,000
7 3,500 24,500 10,500
8 3,500 28,000 7,000
9 3,500 31,500 3,500
10 3,500 35,000 0

5.3.2 Van

Type of asset : Van

Cost of asset : RM 20,000

Economic life : 10 years

Method : Straight line

YEAR ANNUAL ACCUMULATED BOOK VALUE

DEPRECIATION DEPRECIATION
0 20,000
1 2,000 2,000 18,000
2 2,000 4,000 16,000
3 2,000 6,000 14,000
4 2,000 8,000 12,000
5 2,000 10,000 10,000
6 2,000 12,000 8,000
7 2,000 14,000 6,000
8 2,000 16,000 4,000
9 2,000 18,000 2,000
10 2,000 20,000 0
5.3.3 Machinery and equipment

Type of asset : machinery and equipment

Cost of asset : RM 25,000

Economic life : 10 years

Method : Straight line

YEAR ANNUAL ACCUMULATED BOOK VALUE

DEPRECIATION DEPRECIATION
0 25,000
1 2,500 2,500 22,500
2 2,500 5,000 20,000
3 2,500 7,500 17,500
4 2,500 10,000 15,000
5 2,500 12,500 12,500
6 2,500 15,000 10,000
7 2,500 17,500 7,500
8 2,500 20,000 5,000
9 2,500 22,500 2,500
10 2,500 25,000 0

5.4 Sources of fund

SOURCE RM
EQUITY CONTRIBUTION
CASH 40,000
ASSET 40,000
80,000
TERM LOAN 45,000

HIRE-PURCHASE FINANCE 20,000

TOTAL 145,000
5.5 loan Expenses
5.5.1 Loan Amortization Schedule
Loan amount : RM 45,000
Loan Period : 10 years
Interest Rate : 8%
Method : Reducing balance/Annual rest

Year Amount Interest Principal Payment Remaining

balance
0 0 0 0 45,000
1 45,000 3,600 4,500 8,100 40,500
2 40,500 3,240 4,500 7,740 36,000
3 36,000 2,880 4,500 7,380 31,500
4 31,500 2,520 4,500 7,020 27,000
5 27,000 2,160 4,500 6,660 22,500
6 22,500 1,800 4,500 6,300 18,000
7 18,000 1,440 4,500 5,940 13,500
8 13,500 1,080 4,500 5,580 9,000
9 9,000 720 4,500 5,220 4,500
10 4,500 360 4,500 4,860 0
TOTAL 19,800 45,000 64,800

5.5.2 Hire Purchase Repayment Schedule

Cost of asset : RM 25,000
Down payment : RM 5,000
Loan amount : RM 20,000
Loan period : 5 years
Interest : 8%
Method : Flat (annually)
Year Amount Interest Principal Payment Remaining
balance
0 0 0 0 0 20,000
1 20,000 1,600 4,000 5,600 16,000
2 16,000 1,600 4,000 5,600 12,000
3 12,000 1,600 4,000 5,600 8,000
4 8,000 1,600 4,000 5,600 4,000
5 4,000 1,600 4,000 5,600 0
TOTAL 8,000 20,000 28,000
5.6 Financial forecast 2011 to 2013

Year 2011 2012 2013

A CASH INFLOWS
Beginning cash balance 0 121504 201598
Equity-Cash 40000 0 0
Term-Loan 45000 0 0
Cash sales 324,000 324,000 324,000
B Total Cash Inflows 409,000 445504 525598
C CASH OUTFLOWS
Operational Expenditure
Raw materials 20,000 20,000 20000
Direct labor 48000 48000 48000
Operational overhead 4000 4000 4000
Marketing Expenditure
Sales commision 5000 5000 5000
Entertainment allowance 3600 3600 3600
Adminstrative expenditure
Salaries and wages 116400 128040 140844
EPF&SOCSO 16296 17925.6 19718.16
Adminstrative overheads 4000 4000 4000
Loan Repayment
Principal 4500 4500 4500
Interest 3600 3240 2880
Hire-Purchase repayment
Down payment 5000
Principal 4000 4000 4000
Interest 1600 1600 1600
Capital Expenditure
Machinery&Equipment 35000
Furniture&Fixtures 12500
Pre-operational Expenditure 3000
Deposits 1000
D Total Cash Outflows 287,496 243,906 258142.2
E Cash Surplus/(Deficit) 121504 201598 267455.8
F Ending Cash balance 121504 201598 267455.8