COVER PAGE

Brief Background of AfforDabest Company

AfforDabest Company is a registered sole-proprietorship business managed by Claire L.

Ganas located at the Student Entrepreneurship Center Mall (SEC Mall) of Xavier University—

Ateneo de Cagayan, Corrales Avenue, Cagayan de Oro City. The business manufactures only

one product which is called Chickees Roll. Chickees Roll is made up of commercialize flatten

chicken strips rolled with a melted cheese and sauce inside then coated with a flour and bread

crumbs and served together with a cup of rice. One serving costs Php 39.00 only.

On June 2018, the business started with an initial investment of Php 42,000 with only five

workers under Ganas’ management namely: Mary Grace M. Cuasito as the operation manager,

Raul C. Cloma as the sales manager, Angelica D. Alamban as the marketing manager, Jolina H.

Henoguin as the finance manager, and Job Nathan J. Amarga as the cash custodian manager.

Later on, they were able to hire a purchasing manager namely (I-ask ko pa).

AfforDabest Company actually had a different version of their Chickees Roll on the first

five months of their business operation. In line with their mission of producing nutritious meals,

they had inserted two variety of vegetables which are carrots and cabbages. However, due to

improper handling of raw materials, the company experienced spoilage that resulted into a net

loss. In order to fix the problem, they modified their rolls and replaced the vegetables with milk.

Starting November of the same year, the business was able to boost their daily profit. Additionally,

unlike the old version, their current product takes lesser time of preparation as well as minimizes

the expenses while still maintaining the distinctive taste and nutrition.
 Existing Controls and
Assessment/Discussion Recommendation
Accounting Procedures

A. Materials

1. The business maintains In order to become organized

persons in-charge that and avoid misleading

has a limited access for information about the

the raw materials. maintenance and monitoring

of the raw materials, the

general manager assigned

the cash custodian, financial,

and purchasing managers for

the task.

2. The business keeps track Before the acquisition of raw

of their purchases and materials, the cash custodian

issuance. verifies, reviews and

approves the materials to be

purchased.

After the acquisition, the

assigned personnel will

dispose the materials while

the cash custodian receives

the receipt for auditing.

3. The business upholds To accurately verify their Counting of physical

inventory count records, the business counts inventory should be verified

procedure. their raw materials in the through paperwork.

 inventory during Wednesdays

and Saturdays.

4. Lack of maintaining a Due to busy schedule, the The business should have a

minimum level of assigned personnel contingency plan in case the

inventory for each raw sometimes forgot to purchase assigned personnel fails to

material. the necessary raw materials do his/her task. Someone

resulting to running out of may fill in or they could avoid

stock. the problem by determining

the minimum level of

inventory for each raw

material so they know when

to purchase new materials.

This can be easily done when

one notices that a raw

material is running low.

5. The business was able to Since the business is running Raw materials that do not

anticipate the estimated for quite months already, they easily spoil should be

daily usage of their raw were able to estimate the purchased in quantities that

materials. daily usage of their raw are higher than average

materials. For example, they estimate since there is

were already able to estimate current problem of materials

the quantity of rice, oil, and running out of stock due to

materials for packaging to be nonpurchase of materials.

used that day.

6. Lack of storage. Since the business is still The business should keep in

new, they still do not have mind that good storage is an

any stockroom for their raw investment and this will help

materials. This is also the them avoid spoilage costs in

reason why they experience the future.

spoilages on the first few

months of their operations.

7. First-In-First-Out In order to determine the At present, prices of raw

actual unit cost, the business materials are rising rapidly,

applied the First-In-First-Out and the current production

(FIFO) method. Additionally, may be understated,

they put a 60% mark -up for deeming it inaccurate.

their selling price. Additionally, this method

overstates profit especially

now that the country is

experiencing inflation. The

company may want to use

the average method.

8. Defective purchased raw Sometimes, the assigned It is recommended that the

materials. personnel would accidentally personnel familiarize

purchase a smelly chicken. himself/herself with

acceptable conditions of raw

materials as the quality of the

finished product relies heavily

 on the quality of the raw

materials.

B. Labor

1. The business lacks According to the general In this nature of business,

proper labor costing. manager, they do not receive labor costing is dependent on

any payroll or salaries the agreement of the

monthly regularly. However, members of the organization.

they uphold the minimum However, they might want to

wage of Php 245. Each reform their agreement if they

member receives equal wish to be compensated well.

salaries if ever.

2. The business keeps a In order to be fair with each While days-off are effective in

labor time record. other, the business has a increasing employee

labor time record. Meanwhile, performance, the manager

in order to increase may want to try introducing

productivity and sales, the overtime to employees.

general manager advertised

day-off.

C. Factory Overhead

1. Indirect Labor

a. Upholding on duties The general manager acts as The general manager should

a supervisor of the business. not only evaluate the

In order to evaluate the performance of the business,

current performance of the but the performance of the

business, she creates a employees as well.

 report between their target Employees should also

against their actual profit for assess themselves in order

each month. to perform better.

The purchasing staff Members of the business

sometimes forgot to buy the organization should always

needed ingredients for the be well-reminded of their

business operation. tasks. A schedule might help.

2. Indirect Materials

a. Costing of machinery The business included the

depreciation of each

machinery they used for the

operation

b. Costing of supplies The business accurately

listed all the supplies needed

for the operation as well as

its corresponding expenses

3. Improper costing for rent The business included the Utilities and rent should be

heat and light under the rent. accounted for separately.

Prepared by:

AfforDabest Company Group BINAYAO, Tristan Ace

CASAS, Moneia Brae

IBALE, Charissa Joyce

LUSABIA, Donna Czalea

Discussed with:

Claire L. Ganas Raul C. Cloma Angelica D. Alamban Jolina H. Henoguin

General Manager Sales Manager Marketing Manager Finance Manager

Mary Grace M. Cuasito Job Nathan J. Amarga

Operation Manager Cash Custodian Manager Purchasing Manager

Documentation