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INTRODUCTION

The cost benefit analysis is very essential to all the small scale
businesses. The example of a small scale business is the fried chicken
business. Fried chicken business is a good business idea for the
entrepreneurs who want to start a small business. It doesn’t need a big capital
like other chicken businesses. This is the reason why most of the
entrepreneurs engaged to this kind of business. It also presents an
opportunity to make a good profit. In dealing with this, make sure that you
don’t only choose a delicious recipe, each chicken piece should be well
cooked and moist in the inside while staying crispy on the outside.

In South Korea, according to Jason Strother (2017), there are about

50,000 fried chicken restaurants throughout the country. Most are small
franchises that deliver to your door on motorbike. Jeong Eun-jeong, author of
the book “The Tale of Chicken in the Republic of Korea” says these
restaurants exploded onto the scene 20 years ago, following the devastating
Asian financial crisis, when many Korean men lost their jobs. Jeong adds that
entrepreneurs continue to open fried chicken businesses because of the low
initial investment and overhead costs, even if they have no experience in food
industry.

According to Jack (2014), fried chicken is a dish well-loved of all

Filipinos, especially if it is crispy and tasty. In Midsayap, North Cotabato,
Arthur’s Fried Chicken was established three years ago, it started mainly to
cater students, employees and other localities who love the fried chicken it
serves due to the good quality, unique taste and affordability. Even the
passersby who just visits the area drop just to have a taste. Arthur’s fried
chicken had to open another branch on less than a year after it opened just to
accommodate the higher demand of the product it offers.

In the Municipality of Sto.Tomas Davao del Norte, the most common

food business is fried chicken fast food restaurants. Country fried chicken is
one of the fast food restaurants that people prefer to eat their breakfast, lunch,
and dinner because the food is affordable, and they served well-cooked and
delicious fried chicken

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THESIS STATEMENT

In establishing and creating of small scale business it is important for

entrepreneurs to determine whether to continue business operation.

The cost and benefits of a business will be used in analyzing in every

business entity and it is a perfect appraisal of all present and future costs and
benefits. It is serve as a guiding principle of if the business will grow and
ready for expansions.

BUSINESS SUMMARY

Country Fried Chicken is a fast food restaurant that is located at Fd.

Rd. #2, Sto. Tomas Davao del Norte was established last 2011, under the
name of Mr. Hernane Catedrilla, it is a sole proprietorship type of business.
The business opened 14 hours a day, 8am until 10pm. They offer dine-in,
take out and order services. Most of their customer are employees, students
and passersby. The startup cost of the business is financed by the owner, as
they invested a sum of 243,296 the business. The business promotes a
customer’s friendly environment and they served a well-cooked and delicious
fried chicken.

BUSINESS LOCATION

One of the strengths of the business is the good location that

accessible to everyone. The Country Fried Chicken is a fast food restaurant
located at Fd. Rd. #2, Sto. Tomas Davao del Norte.

BUSINESS OWNERSHIP

Country Fried Chicken is a sole proprietorship type of business, owned

by Mr. Hernane Catedrilla.

START-UP SUMMARY

Country Fried Chicken start-up cost that covers the equipment,

furniture, renovation and other expenses that shown below:

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Legal Permit 10,000

Renovation Expense 40,000
Packaging 2,000
Raw Materials 30,000
Salary Expense 30,000
Overhead Expense
Rent Expense 20,000
Utilities Expense 16,000
Fixed Asset
Equipment 79,169
Kitchen Utensils 2,552
Furniture and Fixture 13,575
P243,296

SERVICES OF THE BUSINESS

Country Fried Chicken provides the following customer services.

 Dine-In Services
 Take Out Services
 Order Services

UNIT PRICE

Unit price of each product are determined by the raw materials used.

 Fried Chicken P 23.00

 Rice P5.00
 Soft drinks 750 ml P20.00
8 ounce P 10.00

MARKET SEGMENTATION

Country Fried Chicken had an average of 80 customers per day

namely:

 EMPLOYEES – is a person who works for a private business, a

government department or other organization and is rewarded with a
wage or salary.

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 STUDENT – is a person who is directly enrolled in a school, or other

educational institution who attends classes in a course to attain the
appropriate level of mastery of a subject under the guidance of an
instructor.
 PASSERSBY – people who pass by or walking outside of a store as
they go on to somewhere else.

PERCENTAGE SEGMENTATION OF THE MARKET IN A YEAR

The average customers of the business a day is 80 people

multiplied 360 days. There are 28,800 customers in one year, 45% for
the employees and 30% for the students, and lastly 25% for the
passerby customers.

Passersby
25%
Employees
45%

Students
30%

FINANCIAL STATEMENT

SALES

Name of Products N0. Of Unit Produce Price Total

Fried Chicken 144000 23 3312000
Rice 90000 5 450000
Soft Drinks 750 ml 10950 20 219000
8 ounce 17520 10 175200
P4,156,200

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STATEMENT OF COST OF GOOD SOLD

COUNTRY FRIED CHICKEN

Statement of Cost of Goods Sold
For the year ended March ,2012
Total Direct Material Used 2862897
Overhead

Rent Expense 120,000

Depreciation Expense 19,058.80
Utility Expense 153,600
Total Overhead 292,658.8
Total Manufacturing Cost 3,155,555.8
Work- in Process, Beginning
Total Goods Put into Process 3,155,555.8
Work-in Process, Ending
Total Cost of Good Manufactured 3,155,555.8
Raw Materials Inventory, Beginning
Total Goods Available for Sale 3,155,555.8
Raw Materials Inventory, Ending
Cost of Goods Sold P 3,155,555.8

PERIOD COST

Selling and Administrative Expense

Rent Expense (50 %) 10,000
Utility Expense (20 %) 38,400
Packaging 24,000
Salaries Expense 270,000
Legal Permits 10,000
Renovation Expense 30,000
Total Period Cost P 382,400

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INCOME STATEMENT

COUNTRY FRIED CHICKEN

Income Statement
For the year ended March,2012

Sales 4156200

Cost of Goods Sold

3155555.8

Gross Margin
1000644.2

Selling and Administrative Expenses

382,400

Net Profit
P 618,244

STATEMENT OF CASH FLOW

COUNTRY FRIED CHICKEN

Statement of Cash Flow
For the year ended March,2012

Cash Inflow
Financing
Capital, Beginning 243296
Liability
Total Financing
Operating
Total Sales 4156200
Total Operating Sales
Total Cash Inflows 4399496
Cash Outflows
Total Manufacturing Cost (except Depreciation) 3,136,497.00
Selling and Administrative Expenses 382,400
Investing
Equipment 79,169
Furniture and Fixtures 13,575
Kitchen Utensils 2,552
Total Investing 95,296
Total Cash Outflows 3,614,193
Net Cash Balance P 785,303

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CHANGES OF EQUITY

COUNTRY FRIED CHICKEN

Changes of Equity
For the year ended March,2012
Capital ,Beginning 243,296
Add: Profit 618,244
Total 861,540
Less Withdrawal
Capital, Ending P861,540

BALANCE SHEET

COUNTRY FRIED CHICKEN

Balance Sheet
For the year ended March,2012

Current Asset
Cash 785,303
Total Current Assets 785,303

Non-Current Assets
Equipment 79,169
Accumulated Depreciation 15833.8
Furniture and Fixture 13,575
Accumulated Depreciation 2715
Kitchen Utensils 2,552
Accumulated Depreciation 510.4
Total Non-Current Asset 76,237
Total Assets 861,540
P861,540
Liability and Equity
Liabilities

Equity 861,540
Total Liability and Equity P861,540

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BENEFIT AND COST ANALYSIS

Benefit Calculations

Project benefit calculation are summarized in table below.

3312000
Income in Fried Chicken
450000
Income in Rice
219000
Income in Soft drinks 750 ml
175200
8 ounce
P4,156,200

It can be seen in the Table of Benefit Calculations, the business got the
sales of 4,156,200 in all their products in a year. Meaning, the business
operates well and meet the customer’s satisfaction. Their product made a
mark in the municipality that the customers are easily to recognize the taste.

Cost Calculations

Project cost calculation are summarized in table below.

Legal Permit 10000

Renovation Expense 30000
Packaging 24000
Raw Materials 2598660
Salary Expense 360000
Overhead
Rent Expense 240000
Utilities Expense 180000
Fixed Asset 95296
P3,537,956

It can be seen in Table of Cost Calculations, it is the

summarization of all the expenses during the start of the business. It is
important to list all the expenses to know in the future if the business will gain
profit or loss.

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Benefit Cost Comparison

Project benefit cost calculation are summarized in table below.

Benefits 4156200

Cost 3537956
P 618,244
Benefit Cost Ratio 1.17

The comparison of benefit and cost tells that this business maximize
profit and minimize expenses. The business will continue to operate to have a
bigger opportunity to generate big income. The business benefit cost ratio is
1.17. .

CONCLUSION

This term paper focus in one existing business in Municipality of Sto.

Tomas called Country Fried Chicken. The business is seven years of
existence in chicken industry specifically in fried chicken. It is good to analyze
all the cost and benefits of a business and this term paper presents to the
owner the future of the business if it is growing and making expansion of fried
chicken business.

Based on the information from the owner that presented above they
can make a best judgment and opinion towards the business. The most
beneficial customers to their product are the employees nearby who are
satisfied to the taste and service that they offer. The business will surely
profitable because of the following factors: they maintain cleanliness around
the area, they have a customer friendly staff, the owner ensure the staff to be
treated well, and the unique taste of the product that even the bone of the
chicken you can eat.

The owner started with the big cost of money and end up with bigger
benefits because the income is good, many customers are willing to eat and
buy again in the store. And based on their daily income of the business, it
shows that the business is gaining income, growing and ready for expansions.
So this business can be consider as a profitable one.
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BIBLIOGRAPHY

Smith, Jack (2014), Arthur’s Fried Chicken Franchise retrieved from:

https://franchisemanila.com

Strother, Jason (2017), South Korea’s Obsession with Fried Chicken

Retrieved from: http:// www.pri.org.com, (2017)

University of Southeastern Philippines –

Sto Tomas External Studies Program