Production plan

What is the production process

What building and machinery (fixed assets)
are needed and what will be their cost
What is the useful life of the building and
machinery
How much capacity will be utilized
Where will business be located
How much raw material are required and
what will be their cost
How many labour are needed and what skill
should they have
What will be the cost of labour
What overhead expenses are incurred
What is the production cost per unit

Production process
It is the description of the
process which need not be
lengthy but should cover all the
major operations

Requirement and cost of

building and mahchinery
Identify these items carefully
and estimate their cost
accurately
For the cost, one can find out
form machinery supplier

Useful life of machinery

and building
Life depends on make of
building (whether wood or
concrete structure)
Depends on how much you use
your fixed assets

Capacity utilization
100% capacity utilization
normally means that the
equipment is working eight
hours a day, six days a week

Raw material
requirement
Find out the type, quality and
quantity of raw materials
needed
Find out input output or
conversion ratio

Labour requirement and

their cost
To determine the number of
labour required they can be
break down into skilled, semiskilled, unskilled
Labour cost should include
basic salray, wage, benefits ,
paid leaves, free meals, etc.

Overhead expenses
Overhead expenses include cost
such as :
Rent
Maintenance and repair cost
Depreciation
Cost of utilities (water, electricity)

Production cost per unit

To arrive at the production cost
per unit, add monthly cost of
direct raw materials, direct
labour, overhead expenses then
divide this amount by the
number of units produced
during the month

Organization and management

plan
How will the business be organized
How will business be managed and
operated
What is the business experience and
qualification of the proponent
What pre-operating activities must be
undertaken what expenses will be incurred
What fixed asstes will be required for the
office
What administrative cost will be incurred

Business organization
There are four comon forms of
business organization:
Sole proprietorship
Partnership
Private limited company
Public limited company
Most small business however, are
registered as sole proprietorship

Business management
To manage and operate business
efficiently, their must be some
structure of authority and
responsibility;
Division of labour
Chain of command
Job disign

Experience and qualification of

proponent
To ensure business survival growth,
it is important that the people who
run the business must have the
proper qualification and suitable
experience

Pre-operating activities and its

expenses
Pre-operating could include:
Preparing business plan
Doing market survey
Registering the business etc
Pre-operating cost have to be accounted
for as a part of the total project cost

Fixed assets for the office

These assets include:
Computer
Furniture
Cabinets
Fans
Calcualators, etc