V.

FINANCE ASPECT

This chapter shows the cost of the proposed project and the sources of financing.
This also interprets the financial statements, which include statement of
comprehensive income, statement of financial position, statement of partner’s equity
and cash flow statements.

1. GENERAL ASSUMPTIONS

 The maximum annual capacity is 52,870 packs of 100g mushroom chicharon.

 Annual production will increase 5,000 packs on the second year of operation
due to full production of mushroom chicharon and 20% annually.
 Depreciation is computed on straight-line basis.
 The company hours will be from 8:00 am - 12:00nn and will resume at
1:00pm - 5:pm.
 Land and building will be rented; the land will be for production/growing
room and the building is for cooking, selling and office. The rent expense of
the building will be allocated 25% for office and sales and 50% for factory.

 The project cost will be as follows:

Happy Mushroom

Project Cost

Rental Deposit 44,000.00

Prepaid Rent 22,000.00

Factory Machineries and Equipment 54,050.00

Office Equipment 24,595.00

Office Furniture and Fixtures 13,650.00

Factory Furniture and Fixtures 6,400.00

Sales Equipment 3,930.00

Sales Furniture and Fixtures 6,050.00

Organizational Cost 7,120.00

Raw Materials Inventories 670,890.00

Office Supplies 1,238.00

Factory Supplies 33,569.00

Sales Supplies 1,382.50

 Leasehold Improvements 40,200.00

Transportation vehicle 180,000.00

Total
1,109,074.50

Add: Working Capital 90,925.50

Initial Required Capital

1,200,000.00

 The start of business operation is expected to be six months after the start of
the feasibility study.

PROJECT ACTIVITIES

1. Conduct of Feasibility Study (March - April)

Researchers prepares their proposed business as to its feasibility
in the market.

2. Organization of Partnership (April)

The researchers have decided to operate a business as a
partnership structure wherein the researchers will be considered as
general partners. The formation of the partnership is planned by the
partner in this activity.

3. Registration with concerned agencies (April - May)

It includes filling of formation of partnership and registration of
establishment in DTI, BIR and other government agencies.

4. Setting the location for the business (May)

This period will be for the preparation of the site that will be
used for the operation of the business.

5. Renovation of the building (June)

The stage where the the building being leased will be having
improvements.

6. Acquisition of machines and equipments (June)

This period is for purchasing the machineries, equipment,
furniture and supplies needed for the production.

7. Hiring of key personnels (June - July)

Screening and selecting of applicants who are qualified for the
open position will be made in this period.
 8. Orientation and training of the employees (July)
Applicants who are suited for the position will undergo training
in order to enhance and develop their skills to be more competitive,
productive, efficient and effective in their job and for them to be
familiar in their job responsibility.

9. Purchasing of raw materials (July)

This period is for purchasing the raw materials needed for the
start of the business.

10. Start of operation (August)

This period is the official start of the business operation.

2018
Activities
March April May June July August

1 Conduct of Feasibility Study

2 Organization of Partnership

Registration with Concerned

3
Agencies

Setting the location for the

4
business

5 Renovation of the building

Acquisitions of machines
6
and equipments

7 Hiring of key personnels

Orientation and training of

8
employees

Purchasing of Raw
9
Materials

10 Start of operation

GANTT CHART
2. SPECIFIC ASSUMPTIONS

 Raw materials will be purchased from local suppliers and price of raw
materials and indirect materials is expected to increase by 13.33% on the
second year of operation and 5% annually afterwards.
 Direct raw materials will be restocked every three months. While indirect
raw materials will be replenished monthly direct raw materials end will be
10% of available raw materials.
 There will be no work in process inventory.
 Finished goods at year end will be 5% of of total goods available for sale.
 Direct and indirect labor labor will increase 5% every
 Factory Overhead expenses are as follows:
1. Electricity Expense - Electricity expense in the first year will be 15,000
monthly and will increase 5% annually due to increase in price. It will be
allocated 20% selling, 25% office and 55% factory.
2. Water Expense- water expense on the first year will be 1,000 monthly
and will increase 5% annually due to increase in price and 5% annually
due to increase in production. It will be allocated 15% selling, 15%
office and 70% factory.
3. Factory supplies is expected to increase 20% annually due to increase in
production. It will be restocked monthly and will have a 10% ending
balance annually.
4. Repair and Maintenance will be 5% of the cost of the machinery and
equipment.

3. SPECIFIC ASSUMPTIONS FOR SELLING AND ADMINISTRATIVE

ACCOUNTS

 Sales and purchases are inclusive of Value Added Tax.

 The price of mushroom chicharoom will be based on incremental cost plus
mark up.
 Incremental cost of mushroom chicharon includes Direct Material, Direct
Labor, and Variable and Fixed Overhead Expenses.
 Operating Expense are the following:
 Advertising expense will increase 5% annually.
 Sales Supplies is expected to increase 20% annually due to increase in
production and 5% due to increase in price. It will have a 10% ending
balance annually.
 Office supplies is expected to increase 5% annually and will have a 10%
ending balance annually.
 Internet and telephone expense will be P1099 plan monthly or P131,188
annually.
 Annual Repair and maintenance of the delivery truck will be 5% of its
cost.
 Gasoline will be 20,000 monthly and will increase 10% annually due to
increase in production.
 VII- SCHEDULES

1. GENERAL ASSUMPTIONS

RENT DEPOSIT
monthly
Description payment Total

Land 2 months deposit

10,000.00 20,000.00

Building 2 months deposit 24,000.00

12,000.00

TOTAL 44,000.00

PREPAID RENT
monthly
Description payment Total

Land 1 month advance

10,000.00 10,000.00

Building 1 month advance 12,000.00

12,000.00

TOTAL 22,000.00

ALLOCATION OFFICE RENT EXPENSE

Annual expense Office (25%) Selling (25%) Factory (50%)

 144,000.00 36,000.00 36,000.00 72,000.00

Factory Machineries and Equipment

Machineries Quantity Unit Price Total Cost

Food Dehydrator
1 16,200.00 16,200.00
Machine

LPG Deep Fryer 1 16,000.00 16,000.00

Chest Freezer 1 19,450.00 19,450.00

Duel-Handle Steel
1 2,400.00 2,400.00
Loader

Total 55,850.00

Office Equipment

Equipment Quantity Unit Price Total Cost

Water Dispenser with

1 475.00 475.00
bottle

Airconditioner 1 8,000.00 8,000.00

Printer 1 6,600.00 6,600.00

Electric Fan 1 1,520.00 1,520.00

Desktop Computer Set 1 8,000.00 8,000.00

Total 24,595.00
 Office Furniture and Fixtures

Furniture and Fixtures Quantity Unit Price Total Cost

Mono block chair 4 250.00 1,000.00

Mono block table 1 950.00 950.00

Filing Cabinet 2 5,850.00 11,700.00

Total 13,650.00

Factory Furniture and Fixtures

Furniture and Fixtures Quantity Unit Price Total Cost

Mono block chair 6 250.00 1,500.00

Mono block table 2 950.00 1,900.00

Other Furnitures 3,000.00

Total 6,400.00

Sales Equipment

Equipment Quantity Unit Price Total Cost

Printing Calculator 1 3,800.00 3,800.00

Label Printer 1 -

Label Applicator 1 -

Weighing Scale 1 130.00 130.00

Total 3,930.00
 Sales Furniture and Fixture

Furniture and Fixture Quantity Unit Price Total Cost

Mono block chair 2 250.00 500.00

Display Cabinet 2 2,300.00 4,600.00

Table 1 950.00 950.00

Total 6,050.00

RAW MATERIALS (First 3 months of operation)

Raw Materials Quantity Unit Price Total Cost

Mushroom (per fruiting bag) 1000 25.00 25,000.00

Cooking Oil (17 kg) 100 1,995.00 199,500.00

All Purpose Flour (25kg

38 930.00 35,340.00
sack)

Cornstarch (25kg sack) 10 850.00 8,500.00

Salt (25kg sack) 2 250.00 500.00

Powdered Cheese Flavor

85 1,190.00 101,150.00
(1kg)

Powdered Spicy Flavor

85 1,160.00 98,600.00
(1kg)

Powdered Barbeque Flavor

85 1,190.00 101,150.00
(1kg)

Powdered Garlic Flavor

85 1190 101,150.00
(1kg)

Total 670,890.00

Office Supplies

Supplies Quantity Unit Price Total Cost

Ballpen (box) 1 120.00 120.00

Brown Envelope (long) 6 3.00 18.00

Brown Envelope (short) 6 2.50 15.00

Paper Clips 1 25.00 25.00

Clock 1 100.00 100.00

Columnar Notebook 1 20.00 20.00

Cork Board 1 100.00 100.00

Correction Tape with refill 1 15.00 15.00

Folder (short) 6 4.00 24.00

Folder (long) 6 4.50 27.00

Whole Puncher 1 60.00 60.00

Marker 2 48.00 96.00

Marker ink 1 54.00 54.00

Metal Fasteners 24s 1 35.00 35.00

Pay Envelope 1 35.00 35.00

Plastic Fasteners 2 25.00 50.00

Push Pins 1 30.00 30.00

Record Book 2 40.00 80.00

Scissors 2 25.00 50.00

Bond Paper 1 125.00 125.00

Staple Wires 2 4.50 9.00

Stapler 2 30.00 60.00

Trash Bins 1 30.00 30.00

Tape Dispenser 2 30.00 60.00

Total 1,238.00

Factory Supplies

Supplies Quantity Unit Price Total Cost

Sticker Paper
123 33.00 4,059.00
(10pcs per pack)

Resealable Stand Up Plastic

Food Pouch 49 450.00 22,050.00
(1 pack= 100pcs)

Clock 1 100.00 100.00

Dishwashing Liquid
2 125.00 250.00
(1/2 gallon)

Garbage Bag (roll) 1 210.00 210.00

Hand Sanitizer 2 125.00 250.00

Hand Towel 12s 2 110.00 220.00

Kitchen Tool Set 2 250.00 500.00

Knife Set 2 200.00 400.00

Measuring Cups 2 230.00 460.00

Measuring Spoons 2 50.00 100.00

Pot Holder 4 20.00 80.00

Scissors 4 30.00 120.00

Set of Spoon and Fork 1 100.00 100.00

Sponges 10's 2 50.00 100.00

Trash Bin 3 30.00 90.00

Weighing Scale 1 130.00 130.00

Gloves (10s) 2 65.00 130.00

Hairnet (10s) 2 95.00 190.00

Rope (200 yard) 2 790.00 1,580.00

Tray 10 65.00 650.00

Water Spray Gun with Hose 1 1,800.00 1,800.00

Total 33,569.00
 Sales Supplies

Supplies Quantity Unit Price Total Cost

Paper bag (100pcs per pack) 10 130.00 1,300.00

Staple Wires 5 4.50 22.50

Stapler 2 30.00 60.00

Total 1,382.50

LEASEHOLD IMPROVEMENTS

Particulars Amount

Growing room 15,000.00

Store Racks 3,000.00

Ceiling Works 9,000.00

Electrical Wirings and Outlets 3,500.00

Water Pipes 3,500.00

Tiles Work 3,000.00

Signboards 1,200.00

Lightning Fixtures 1,000.00

Paints 1,000.00

Total Invoice Price of Leasehold

Improvements 40,200.00

2. SPECIFIC ASSUMPTIONS

a) SALES AND PRODUCTION

 Production Schedule- Yr 1

Daily production 170 packs

no. of operating
311
days

annual
52870 packs
production

Production Schedule- Yr 2

Daily production 170 packs

no. of operating days 341

total 57,970 packs

increase in production 20%

annual production 69,564 packs

PRODUCTION SCHEDULE- Yr 3-5

Increase in No. of
YEAR
Production Production

2 69,564

3 20% 83,477

4 20% 100,172

5 20% 120,207

b) COST OF GOOD SOLD ACCOUNTS

SCHEDULE OF DIRECT MATERIALS PURCHASE

Year of Purchase increase (%) Direct Materials

 1 670,890.00

2 13.33% 760,319.64

3 5% 798,335.62

4 5% 838,252.40

5 5% 880,165.02

SCHEDULE OF FACTORY SUPPLIES EXPENSE

Year of Purchase increase (%) Factory Supplies 90% Expense 10% unused

1 317,790.00 286,011.00 31,779.00

2 20% 381,348.00 343,213.20 38,134.80

3 20% 457,617.60 411,855.84 45,761.76

4 20% 549,141.12 494,227.01 54,914.11

5 20% 658,969.34 593,072.41 65,896.93

FACTORY RENT EXPENSE

Land 120,000.00

Building 72,000.00

Total 192,000.00

RENT EXPENSE LAND

monthly payment no. of months annual expense

10,000.00 12 120,000.00

TOTAL 120,000.00
 Schedule of Electricity Expense

Year increase Annual expense Selling (20%) Office (25%) Factory (55%)

1 180,000.00 36,000.00 45,000.00 99,000.00

2 5% 189,000.00 37,800.00 47,250.00 103,950.00

3 5% 198,450.00 39,690.00 49,612.50 109,147.50

4 5% 208,372.50 41,674.50 52,093.13 114,604.88

5 5% 218,791.13 43,758.23 54,697.78 120,335.12

Schedule of Water Expense

Year increase Annual expense Selling (15%) Office (15%) Factory (70%)

1 12,000.00 1,800.00 1,800.00 8,400.00

2 5% 12,600.00 1,890.00 1,890.00 8,820.00

3 5% 13,230.00 1,984.50 1,984.50 9,261.00

4 5% 13,891.50 2,083.73 2,083.73 9,724.05

5 5% 14,586.08 2,187.91 2,187.91 10,210.25

c) STATEMENT OF COMPREHENSIVE INCOME ACCOUNTS
d) STATEMENT OF FINANCIAL POSITION ACCOUNTS
e) STATEMENT OF CHANGES IN EQUITY ACCOUNTS
f) STATEMENT OF CASHFLOW ACCOUNTS