Lellith Garcia

A BUSINESS PLAN FOR FOOD PROCESSING OF ASUNCION CONSERVATION ENTERPRISE FOOD PROCESSING: 1. 2. 3. 4. 5. Dried Fish (Flying Fish) Dried Fish (Anchovy) Marinated Fish Bottled Fish Kolo Chips Table of Contents I. EXECUTIVE SUMMARY .................................................................................................................. 1 II. MARKET ASPECT ............................................................................................................................. 2 2.1. Product ......................................................................................................................................... 2 2.2. Target Market.............................................................................................................................. 2 2.3. Market Situation .......................................................................................................................... 2 2.7. Prices ........................................................................................................................................... 3 2.8. Channels of Distribution ............................................................................................................ 3 2.9. Promotions .................................................................................................................................. 4 2.10. Projected Sales....................................................................................................................... 4 TECHNICAL ASPECT ................................................................................................................... 4 III. 3.1. Product ......................................................................................................................................... 4 3.2. Process ........................................................................................................................................ 5 3.3. Facilities and Equipment ........................................................................................................... 7 3.4. Production Volume ..................................................................................................................... 8 3.5. Location ....................................................................................................................................... 8 3.6. Raw Materials ............................................................................................................................. 8 3.7. Direct Labor ................................................................................................................................. 9 3.8. Utilities .......................................................................................................................................... 9 3.9. Environmental Safeguard ......................................................................................................... 9 MANAGEMENT ASPECT ........................................................................................................... 10 IV. 4.1. Proponent .................................................................................................................................. 10 4.2. Type of Organization ............................................................................................................... 10 4.3. Organization .............................................................................................................................. 10 4.4. Selling and Administrative Expenses .................................................................................... 13 FINANCIAL ASPECT....................................................................................................................... 14 V. 5.1. Total Project Cost ..................................................................................................................... 14 5.2. Projected Financial Statements ............................................................................................. 16 5.3. Financial Analysis..................................................................................................................... 18 VI. 6.1. SOCIAL BENEFITS ..................................................................................................................... 20 Direct Benefits........................................................................................................................... 20 6.2. VII. Indirect Benefits ........................................................................................................................ 21 SUPPORTING SCHEDULES ..................................................................................................... 22 I. EXECUTIVE SUMMARY Asuncion Conservation Enterprise is engaged into dried fish (flying fish and anchovy), marinated fish, bottled fish, and kolo chips production. Target markets are the grocery stores, hotels, restaurants, resorts and residents in the municipalities of Cantilan, Lanuza, and Tandag. There are not many suppliers who produce high quality products that cater the same market as the CE, so it is still viable to expand market. Prices are set based on cost-oriented pricing strategy. Products are delivered through courier for buyers outside the region and through public transport vehicles for neighboring areas. Products are promoted through trade fairs, displays in festivals, product sampling, and word-of-mouth marketing strategies. Projected sale for year 1 is estimated at P578, 900. Products are assured to be in high quality and undergone processes that ensures good manufacturing practices. The business location is abundant in raw materials especially during seasons which are the time to take advantage of to produce in bulk and cost-efficient manner. The members are also the workers who are paid on output basis. The source of electricity will be the solar panels that will be purchased before the start of expansion to run the facilities needed for production. No wastes will be disposed during production since it will be utilized by fishers as food for fish. Asuncion Conservation Enterprise is an association organized on February 2017 and registered in Department of Labor and Employment on July 2017. Members were given trainings and seminars to equip them for their business endeavor as a group. Duties and responsibilities are designated based on the assigned roles. Total project cost needed for the proposed expansion amounted to P271, 015.00. Projected net income for year 1 is P106, 353.00 with return on investment of 50%. Payback period is one year, seven months and 21 days with net present value of P208, 196.00. Gross profit rate and net profit margin of the project is 36.98% and 18.37%, respectively. This project expansion will give additional income for the members through wages and shares. It is the goal of the CE to provide enough compensation for the laborers to meet the needs of their families. Marine conservation will also be promoted through this project. II. MARKET ASPECT 2.1. Product The business produces dried flying fish, dried anchovy, marinated fish, bottled fish, and kolo chips. Dried flying fish is split in half with a fine, soft texture while the dried anchovy has a shiny and intact color of the fresh fish and no crooked piece as these are delicately put individually in the dryer. Both are packed in a 75-gram sealed brown pouch packaging. Dried fish maintains a less-salty flavor to also cater the taste of children and health-conscious individuals. Marinated and bottled fish use traditional ingredients to promote a “lutong-bahay” taste of food. Marinated flying fish is packed in a reusable container (number of pieces per pack depends on orders) while the bottled fish is put in a 375 mL bottle. The latter contains fish cut into three pieces with head and tail removed. Kolo chip is a healthy alternative snack and has a distinct taste since there are no other producers of this product in its target market. Chips are packed in 100-gram transparent pouch packaging. It can be assured that products are of high quality as raw materials are processed right away upon buying it from fishers/sellers which can be right away observed in the fine texture and color of fish meat for fish products and slices of chips. 2.2. Target Market Dried fish are sold to Fishers and Changemakers, Inc. (FCI), a marine conservation-oriented organization situated in Cebu City, and in the locality of Cantilan and neighboring municipalities of Lanuza, and Tandag. Marinated fish, bottled fish, and kolo chips are sold in Cantilan, Lanuza and Tandag. Target markets in these areas include grocery stores, hotels, restaurants, retailers, and end consumers. 2.3. Market Situation Dried fish, marinated fish, and bottled fish are easy to cook viands and are commonly eaten during breakfast. There are demands for these products as the Filipinos love to eat these kinds of foods. On the other hand, kolo chips are served as snacks both for children and adult as an alternative healthy, and affordable food. Shown in table 1 is the computed projected demand based on the total expenditures of processed fish products derived from total expenditures of fish and marine products per household, and the total expenditures of chips extracted from the total expenditures of food not elsewhere classified. According to Philippine Statistics Authority, average annual family income is P267, 000.00. Of this, total expenditures of fish & marine products are 5.4% while 1% for food not elsewhere classified. Processed fish products are estimated at 8% of the total expenditures of fish & marine products; chips are estimated at 3%. Number of household is computed at 72, 247 with annual growth rate of 1.03% for the municipalities of Cantilan, Lanuza, and Tandag. Year Year 1 Year 2 Year 3 Table 1. Projected Demand, in Peso Fish Products Chips Total 83,332,579.68 5,786,-,119,-,190,905.25 5,846,-,037,-,058,071.57 5,906,-,964,882.10 Market share is computed at 0.4% and 3.6% for fish products and chips for year 1, respectively. This is computed using the projected demand since there is no available data for supply. Shown below is the market share projected in three years. Table 2. Market Share Year Fish Products Chips Year 1 0.4% 3.6% Year 2 0.5% 4.1% Year 3 0.6% 4.7% 2.7. Prices Dried flying fish is sold for P80.00 for local markets and P120.00 for FCI. The latter pitched a higher price as it is only buying products sourced out from producers that promote marine conservation. Dried anchovy is pegged at P140.00 per 75-grams, marinated fish is sold at P35.00 per piece, bottled fish is disposed for P100.00 per bottle, and the kolo chips for P80.00 per pack. Selling prices for these products are shown in the table below and projected to increase by 5% per annum. Table 3. Selling Prices Particulars Dried Fish (Flying Fish) - FCI Dried Fish (Flying Fish) - Local Dried Fish (Anchovy) Marinated Fish Bottled Fish Kolo Chips 2.8. Year- Year- Year- Channels of Distribution All products are transported from the island of Asuncion to Cantilan, and then from there to different buyers. For FCI, dried fish is delivered through courier delivery. For nearby municipalities, products are delivered through public utility vehicles. Delivery expenses are estimated at P1, 000.00 per month and estimated to increase by 5% annually. 2.9. Promotions All products are produced in a high quality manner which makes a good positioning in the market. Raw materials are selected based on 3Cs (clean, cool, care), an advocacy of marine conservation which only purchase fish from fishers who use the legal way of fishing, and assure that catch are properly handled from the time it is caught until sold to the customers. The general manager, who also served as the marketing officer, is bringing samples with her and presents it to prospect buyers in the locality and neighboring municipalities. Seeing the actual products and even tasting it would entice prospect buyers to buy the products. Products will also be promoted through trade fairs, and festivals. The marketing officer and member who can bring sales will be given an incentive of 10% of the gross sales. Also, the association is supported by the LGU of Cantilan which helps promotes the products of the group to locals and even tourists. The island of Asuncion was already featured in “Byahe ni Drew”, a national television program that promotes different beautiful and amazing places both here in the Philippines and abroad. That particular episode that featured the island already got thousand views. Through that particular program, products produce by Asuncion Conservation Enterprise were promoted. 2.10. Projected Sales For year one, sales are projected at P578, 900.00 and estimated to increase to P766, 469.03 for year three as a result of annual estimated increase in prices (5%) and production volume (10%). Shown in the table below is the projected sales projected in three years. Table 4. Projected Sales Particulars Dried Fish (Flying Fish) - FCI Dried Fish (Flying Fish) - Local Dried Fish (Anchovy) Marinated Fish Bottled Fish Kolo Chips TOTAL III. TECHNICAL ASPECT 3.1. Product Year 1 76,-,-,-,-,-,-,900.00 Year 2 87,-,-,-,-,-,-,015.00 Year 3 101,-,-,-,-,-,-,469.03 Dried fish, marinated fish, and bottled fish are of high quality compared to what are sold in the market because these are made out of fresh fish directly bought from the fishers themselves. Flying fish and anchovy are a good source of protein; also, anchovy is packed with omega-3 fatty acids which can help maintain a healthy heart. Kolo chips are made from a nutritious fruit called bread fruit or as the locals called “kolo”. It is rich in potassium and possesses a considerable amount of fiber which can promote good digestion. 3.2. Process Presented below are the processes in producing dried flying fish, dried anchovy, marinated fish, bottled fish, and kolo chips. a. Dried Flying Fish  Fresh flying fish is weighed, of which ten kilograms of it is process per production. It is washed and ice will be put on it to ensure freshness throughout the processing.  Fins and scales are removed along with its gill and integral organ.  The fish belly is being brushed to see to it that the blood and internal organs are totally removed. It is then set aside for 5 minutes to drain.  A brine solution of 1:10 or 1:5 is prepared. 1:10 ratio is intended for FCI while the solution of 1:5 is for the local market. Two solutions for 1:10 solution is prepared for ten minutes each. On the other hand, 1:5 solutions is prepared in four solutions for five minutes each.  The processed fish is then ready for drying; fish is put in the solar dryer individually with care. First day is air drying then another 1 and ½ days to 2 days for sun drying depending on the heat.  Dried fish is then ready for packing and sealing. Dried fish is now ready for storage and delivery b. Dried Anchovy  Fresh anchovy is weighed and washed; ice is used during the whole process to ensure freshness of the raw materials. Five kilograms is processed per production.  After, it is soaked in a brine solution of 1:10 or 1:5 depending on the buyer. Two solutions for 1:10 solution is prepared for 10 minutes each. On the other hand, 1:5 solutions is prepared in four solutions for 5 minutes each.  It is then ready for drying. Compared to flying fish, putting anchovies in solar dryer are much more tedious since it has to be done per piece. This takes around four hours by six persons. 1st day is air drying then another one-half day to one day of sun drying depending on the heat of the sun.  Selection process follows to separate the good quality from rejects which is around 5%.  Then, the next steps are packing, sealing, storing and/or delivery. c. Marinated Fish  Fresh flying fish is weighed, seven kilograms of it is processed per production. These are washed in water with ice to ensure freshness throughout the processing.  Fins and scales are removed along with gills and integral organs.  The belly of the fish is brushed to see to it that the blood and internal organs are totally removed. It is then set aside for five minutes to drain.  Cleaned fish is now ready to be marinated using vinegar, garlic, and black pepper. It is set aside for three hours.  Marinated fish is ready for packing and delivery. d. Bottled Fish  Fresh flying fish is weighed and washed with ice. Five kilograms is processed per production.  Fins and scales will be removed along with gills and integral organs.  The fish will belly is brushed to see to it that the blood and internal organs are totally removed.  The heads and tails are removed and the fish are cut into three pieces. Simultaneously, bottles are sterilized.  Cleaned fish are put in the bottles. Using the pressure cooker, the fish are pre-cooked for 20 minutes.  Afterwards, the corn oil, carrots, garlic, black pepper leaves, and bell pepper are put in the bottles that already contain the pre-cooked fish.  Bottled fish are set aside to cool down. Then, these are sealed and labeled. Finished products are now ready for delivery. e. Kolo Chips  Kolo fruit are washed and peeled then cut open. The hard part in the middle part is removed. Ten kolo fruits are processed per production. This takes about one hour by one person  Cleaned kolo fruit is ready to be cut and sliced in small pieces. It takes an hour for one person.  Sliced kolo fruit is fried which takes five hours by two persons.  Upon removing the kolo chips from the frying pan, these are transferred into trays or baskets with tissues in the bottom to absorb the excess oil. Kolo chips are set aside for a day or two.  Selection process then follows in which around 10% of rejects are removed.  Packing and labeling are done next. Kolo products are now ready for storage or delivery. 3.3. Facilities and Equipment Processing area and mechanical dryer of the group are not yet operational. However, other facilities and equipment are already used by the group. Since there is no electricity in the area, a solar panel is needed to power the facilities needed for the production. Also, as of now, cutting of kolo chips is manual. A mechanical chipper is necessary to produce in volume and dramatically lessen the production time. List of these facilities and equipment along with the number of units, costs, estimated useful life (EUL), remaining useful life (RUL), net book value, and depreciation expense are shown in tables 5a and 5b. Depreciation expense is computed using the straight-line method. Table 5a. Facilities and Equipment Particulars Solar Dryer Chest Freezer Stainless Table 3" x 3" Stainless Table 3" x 8" Stainless Table with Sink Vacuum Sealer Plastic Boots Weighing Scale (5 kg) Weighing Scale (25 kg) Weighing Scale (60 kg) Chopping Board (white) Chopping Board (blue) Scissor Measuring Cup Measuring Spoon Banyera Stainless Basin (small) Stainless Basin (medium Stainless Basin (large) Plastic Crates (white) Plastic Crates (black) Plastic Tray Aluminum Tray Apron Single-Burner Stove Pressure Cooker Strainer Stainless Knife (black handle) Stainless Knife (rosette) Stainless Knife (white handle) Excel Cooker Knife (brown hanndle) Tramontina Knife (white handle) Ice Box (small) Rubber Made Cooler Total No. of Unit Unit 1 Unit 1 Unit 1 Piece 1 Piece 1 Piece 1 Unit 5 Pieces 1 Piece 1 Piece 1 Piece 5 Pieces 2 Pieces 5 Pieces 1 Set 1 Set 5 Pieces 3 Pieces 3 Pieces 3 Pieces 2 Pieces 2 Pieces 1 Piece 4 Pieces 10 Pieces 1 Piece 1 Unit 1 Set 2 Pieces 2 Pieces 2 Pieces 3 Pieces 3 Pieces 1 Piece 1 Piece Unit Cost Total Cost 34,-,-,-,600.00 7,600.00 7,600.00 9,600.00 9,-,-,-,-,-,-,500.00 1,-,-,-,000.00 3,-,500.00 3,500.00 - Year Acquired EUL RUL Annual Depreciation Net Book Value-,-,-,-,-,900.00 5,-,400.00 7,-,975.00 8,-,-,-,125.00 1,-,-,-,-,166.67 2,-,-,757.50 Table 5b. To be Acquired Fixed Assets Particulars Year 1 Kolo Chipper Solar Panel Subtotal 3.4. Quantity Unit Cost 1 1 30,-,000.00 Total Cost EUL 30,-,-,000.00 Annual Depreciation 5 5 6,000.00 4,-,000.00 Production Volume Production volumes for the first year are estimated at 1, 267 packs of dried flying fish, 800 packs of dried anchovy, 1, 400 pieces of marinated fish, 800 bottles of bottled fish, and 2, 640 packs of kolo chips. These production volumes as shown below are projected to increase by 10% per annum. Table 6. Production Volume Particulars Year 1 Year 2 Dried Fish (Flying Fish) 1,267 1,393 Dried Fish (Anchovy) 800 880 Marinated Fish 1,400 1,540 Bottled Fish 800 875 Kolo Chips 2,640 2,880 3.5. Year 3 1,-,-,120 Location Business site of AsuncionConservation Enterprise is located in Ayoke, General Island in the municipality of Cantilan. Asuncionis an island which can be reached by boat for around 45 minutes to 1 hour. There are no passenger boats yet that regularly travel to Asuncionbut most of the residents own a boat. These serve as transport for purchases and delivery of finished products. 3.6. Raw Materials As long as it is a season for flying fish, anchovy and kolo, raw materials are abundant. Season for flying fish are in the months of October to February but hard to tell for the anchovy since it is not the same every year. Also, kolo fruits are available from September to February. Production time is based on the availability of raw materials stated above. However, flying fish products can still be produced during lean months though in small volume. Ice and other materials are bought from Cantilan. Shown in table 7 are the costs of direct materials projected in three years. Particulars Dried Flying Fish Dried Anchovy Marinated Fish Bottled Fish Kolo Chips Total 3.7. Table 7. Direct Materials Monthly Year 1 Year 2 15,-,-,-,-,-,390.80 4,-,-,142.50 5,-,-,-,-,-,-,-,-,871.99 Year 3 104,-,-,-,-,-,365.97 Direct Labor Direct labor costs are piece rate basis of which fish processing is based on the quantity of fresh fish processed while the kolo chips labor cost is based on finished product. Direct labor are compensated for P25.00 per kilogram for fish processing; and for kolo chips, it is P10.00 per pack. Direct labor is projected to increase by 5% annually as shown in the table below. Table 8. Direct Labor Particulars Dried Fish (Flying Fish) Dried Fish (Anchovy) Marinated Fish Bottled Fish Kolo Chips Total 3.8. Rate/Piece- Monthly 2,500.00 1,-,-,275.00 Year 1 12,500.00 7,500.00 4,375.00 3,-,-,900.00 Year 2 14,437.50 8,662.50 5,053.13 3,-,-,002.50 Year 3 16,-,005.19 5,836.36 4,-,-,049.23 Utilities Fuel consumed for cooking will incur P9, 600 per annum and is expected to increase by 5% per annum. Source for electricity are solar panels and water is free in the area. 3.9. Environmental Safeguard Wastes produce during production are used by the fishermen as food for fish. With that, production will not cause any environmental concerns. IV. MANAGEMENT ASPECT 4.1. Proponent Asuncion Conservation Enterprise (ACE) was established on February, 2017 with 16 members and registered in DOLE on July, 2017. The members had undergone different trainings on fish processing namely, bottled fish production, dried fish production, boneless bangus production, and smoked fish production. 4.2. Type of Organization The proponent is an association with DOLE Registration # of 146-DER-SA-07-17. It started with P17, 500.00 capitalization which was used as working capital when the business operation started. ACE is already producing dried fish, bottled fish and, kolo chips for more than a year. It also plans to produce the marinated fish commercially. 4.3. Organization In order for an organization to function effectively and efficiently, it needs an organizational structure to perform designated duties and responsibilities. Shown below are the key personnel with their corresponding duties and responsibilities. a. Board of Officers  Provide general policy direction;  Formulate the strategic development plan;  Determine and prescribe the organizational and operational structure;  Review the Annual Plan and Budget and recommend for the approval of the General Assembly (GA);  Establish policies and procedures for the effective operation and ensure proper implementation of such;  Evaluate the capability and qualification, and recommend to the GA the engagement of the services of the External Auditor;  Declare the members entitled to vote;  Decide election related cases;  Act on cases involving violations of Code of Governance and Ethical Standards; and  Perform such other functions as may be prescribed in the by-laws or authorized by the GA. b. Chairperson   Set the agenda for board meetings in coordination with the other members of the BOD; Preside over all meetings of the Board of Officers and of the GA;  Sign contracts, agreements, certificates, and other documents on behalf of the CE group as authorized by the BOD or by the GA;  Perform such other functions as may be authorized by the BOD or by the GA. c. Treasurer  Ensure that all cash collections are deposited in accordance with the policies set by the BOD;  Have custody of all funds, securities, and documentations relating to all assets, liabilities, income and expenditures.  Monitor and review the financial management operations of the CE group, subject to such limitations and control as may be prescribed by BOD;  Maintain full and complete records of cash transactions;  Perform such other functions as may be prescribed in this by-laws. d. Secretary  Keep an updated and complete registry of all members record, prepare and maintain records of all minutes of all meetings of the BOD and the GA;  Ensure that necessary BOD’s actions and decisions are transmitted to the management for compliance and implementation;  Ensure and certify the list of members who are entitled to vote as determined by the BOD;  Prepare and issue Share Certificates;  Serve notice of all meetings called and certify the presence of quorum of all meetings of the BOD and GA;  Keep copy of the Treasurer’s report and other reports;  Keep and maintain the Share & Transfer Book;  Serve as custodian of the CE group seal; and  Perform such other functions as may be prescribed in the by-laws or authorized by the GA. e. Auditor  Monitor the adequacy and effectiveness of the CE group’s management and control system;  Audit the performance of the CE group and its various responsibility centers;  Review continuously and periodically the books of account and other financial records to ensure that these are in accordance with the CE group principles and generally accepted accounting procedures;  Submit reports on the result of the internal audit and recommend necessary changes on policies and other related matters on operation to the Board of Officers and GA;  Recommend or petition to the Board of Officers the conduct of special general assembly when necessary; and  Perform such other functions as may be prescribed in the by-laws or authorize by the GA. f. General Manager  Over see the overall day-to-day business operations of the CE group by providing general direction, supervision, management and administrative control over all operating departments subject to such limitations as may be set forth by the BOD and the GA;  Formulate and recommend in coordination with the operating departments under his/her supervision, the CE groups Business Plan, program and projects, for approval of the BOD and ratification of GA;  Implement the duly approved plans and programs of the CE group and any other directive or instruction of the BODs;  Provide and submit to the BODs monthly reports on the status of the group’s operation vis-à-vis its target and recommend appropriate policy or operational changes, if necessary;  Represent the CE group in any agreement, contract, business dealings, and in any other official business transaction as may be authorized by the BODs; and  Ensure compliance with all administrative and other requirements of regulatory bodies; and  Perform such other functions as may be prescribed in the by-laws or authorize by the GA. g. Cashier      GA. Handles monetary transactions; Receives/collects payments and deposits; Responsible for money received and expended; Prepare reports for financial transactions; Perform such other functions as may be prescribed in the by-laws or authorize by the h. Accountant  Install an adequate and effective accounting system within the CE group;  Render reports on the financial condition and conditions and operations of the CE group monthly; annually or as may be required by the Board of Officers and/or the general assembly;  Provide assistance to the Board of Officers in the preparation of annual budget;  Keep, maintain and preserve all books of accounts, documents, vouchers, contracts and other records concerning the business of the CE group and make them available for auditing purposes to the Chairperson of the Audit Committee; and  Perform such other duties as the Board of Officers may require. i. Bookkeeper  Records and update books of accounts;  Provide assistance in the preparation of reports on the financial condition and operations of the CE group monthly, annually or as may be required by the Board of Officers and/or the general assembly;  Keep, maintain, and preserve all books of accounts, documents, vouchers, contracts and other records concerning the business of the CE group and make them available for auditing purposes to the Chairperson of the Audit Committee; and  Perform such other duties as the Board of Officers may require. j. Operations Manager      Oversee and monitors the over-all production process; Monitor and evaluate all the processing crew assigned for the day of processing; Monitor and evaluate the quality of the product to be sent to the buyer; Monitor and evaluate the supplies in the storage is complete; and Perform such other duties as the Board of Officers may require. k. Assistant Operation Manager  Request and evaluate quotations, and prepares the purchase order of the supplies for production;  Purchase supplies for production;  In case of the absence of the Operations Manager, he/she shall take over all the duties of the operations manager; and  Perform such other duties as the Board of Officers may require. 4.4. Selling and Administrative Expenses Selling and administrative expenses incurred in running the business are delivery expense, permits & licenses, representation expense, trainings & seminars, labels, and miscellaneous expense. These are shown in the table next page for three years projection period. Table 9. Selling and Administrative Expenses Particulars Delivery Expense Permits & Licenses Representation Expense Trainings & Seminars Label Sales Incentives Miscellaneous Total V. FINANCIAL ASPECT 5.1. Total Project Cost Monthly 1,-,666.80 4,-,490.97 Year 1 12,-,-,000.00 3,-,-,890.00 1,-,704.00 Year 2 12,-,-,500.00 3,-,-,601.50 1,-,294.30 Year 3 13,-,-,025.00 3,-,-,646.90 1,-,616.35 The business has a Total Project Cost of P271, 014.59 wherein the P50, 000.00 to be used in purchasing additional fixed assets will be sourced out and the remaining P55, 032.09 will be the additional investment of the CE. Amounting to P145, 370.00 are the existing assets of the group. Table 10. Total Project Cost ASSETS Kolo Chipper Solar Panel Exisitng Facilities and Equipment Subtotal Working Capital (1 month) Direct Materials Direct Labor Production Overhead Selling and Administrative Expense Subtotal Less:Working Capital in Circulation Net Working Capital Requirement TOTAL PROJECT COST Existing 124,-,757.50 To be Acquired 30,-,-,000.00 Total Project Cost 30,-,-,-,757.50 49,-,275.00 5,-,-,-,-,032.09 20,-,-,275.00 5,-,-,-,-,644.59 125,644.59 271,014.59 20,612.50 145,370.00 Underlying Assumptions: Dried Flying Fish     Recovery rate from fresh fish to dried fish is 20%. 5% of the dried fish is considered reject. An average of 10 productions per month for dried flying fish. Season for flying fish is from October to February.  It is estimated that dried flying fish production is 5 months in a year considering the weather and seasonality of flying fish.  Production volumes are projected to increase by 10% per annum.  For salt solution, 1:5 ratios will be used as basis for computation.  Total of four salt solutions per production; 230 grams of salt per solution. Dried Anchovy  An average of 15 productions per month for dried anchovy.  It is estimated that dried anchovy production is 4 months in a year considering the weather and seasonality of anchovy.  For salt solution, 1:5 ratios will be used as basis for computation.  Total of 4 salt solutions per production; 230 grams of salt per solution.  Production volume is projected to increase by 10% per annum. Marinated Fish  It is estimated that there are 8 pieces of flying fish in 1 kg.  An average of 5 productions per month.  It is estimated that dried flying fish production is 5 months in a year considering the weather and seasonality of flying fish.  Production volume is projected to increase by 10% per annum. Bottled Flying Fish  It is estimated that 5 kilograms of fresh fish can produce 32 bottles of bottled fish.  An average of 5 productions per month.  It is estimated that marinated fish production is 5 months in a year considering the seasonality of flying fish.  Production volume is estimated to increase by 10% annually.  Condiments include carrots, garlic, black pepper leaves, and bell pepper. Kolo Chips      It is estimated that 5 pieces of kolo fruits can produce 11 packs of kolo chips. An average of 20 productions in a month; 6 months in a year. Season for kolo fruit is from September to February. Direct labor is P10.00 per pack. Production volume is estimated to increase by 10% annually. Other Assumptions:  Increase in selling prices, costs and expenses are pegged at 5%. Though current inflation rate is recorded at 6.7% for the Philippines, latest available data in Philippine Statistics Authority (May 2018) of inflation rate in Surigao del Sur is recorded at 1.4%. By this data in hand, 5% is a conservative and reasonable assumption.  A box of ice costs P140; per box weighs 30 kilograms.  Direct labor for fish products are based on the quantity of fresh fish which is P25.00 per kilogram.  Direct labor cost is estimated to increase by 5% per annum.  Production supplies include mask, hair net, brush, etc.  Production overhead is assumed to increase by 5% annually.  Sales incentive for marketing officer and members who can deal the products is pegged at 10% of the gross sales.  Most of the unit costs of existing facilities and equipment are not actual costs since there are no available data. Costs are gathered based on the best available resources in the internet.  Depreciation expense is computed using the straight-line method. 5.2. Projected Financial Statements a. Projected Income Statement Shown below is the projected financial statement for the three-year projection period. It shows an increasing trend of profit and income. Table 11. Projected Income Statement Particulars Gross Sales Less: Production Cost Gross Profit Less: Administrative Expenses Net Income before Tax b. Year 1 578,-,-,-,-,352.67 Year 2 666,-,-,-,-,840.46 Year 3 766,-,-,-,-,072.72 Projected Cash Flow Statement Increasing net cash flow shows that the business can finance its day-to-day operation. Table 12. Projected Cash Flow Statement Particulars Cash Inflows Cash Sales Grant Additional Investment TOTAL Cash Outflows Acquisition of Fixed Assets Payment for Direct Materials Payment for Direct Labor Payment for Production Overhead Payment for Selling and Administrative Payment for Patronage Refund TOTAL Net Cash Flow ADD: Beginning Balance of Cash Cash Balance, End c. Pre-Expansion Year 1 Year 2 Year 3 578,900.00 666,015.00 766,469.03 578,900.00 666,015.00 766,469.03 249,-,-,-,704.00 7,-,-,-,-,294.30 14,-,-,-,-,616.35 50,000.00 425,169.83 491,110.29 564,860.55 55,-,-,644.59 153,-,-,374.76 174,-,-,279.47 201,-,-,887.94 50,-,-,032.09 50,000.00 Projected Balance Sheet Three-year projection of the balance sheet is shown in table next page. It presents that the business has no obligation and it finances the operation on equity. Table 13. Projected Balance Sheet Particulars ASSETS Current Assets: Cash Total Current Assets Non-Current Assets Facility and Equipment Less:Accumulated Depreciation Total Non- Current Assets TOTAL ASSETS Pre-Expansion Year 1 Year 2 Year 3 75,-,644.59 229,-,374.76 404,-,279.47 605,-,887.94 174,-,757.50 174,-,-,380.00 178,-,-,315.75 185,-,-,780.00 250,402.09 356,754.76 491,595.22 659,667.94 145,-,-,032.09 250,402.09 356,754.76 491,595.22 250,402.09 106,-,754.76 134,-,595.22 168,-,667.94 250,-,402.09 356,-,754.76 491,-,595.22 659,-,667.94 LIABILITIES EQUITY Equity, Beginning Grant Additional Investment ADD: Net Income Total Owner's Equity Less: Patronage Refund Equity, End TOTAL EQUITY 5.3. Financial Analysis a. Financial Ratio Profitability Ratios It shows the capacity of the business to generate profit and income in relation to sales. Net profit margin and gross profit rate show an increasing trend. Table 14. Profitability Ratios b. Particulars Net Income Gross Sales Net Profit Margin Net Profit Margin Year 1 Year 2 106,-,-,-,-% 20.25% Year 3 168,-,-% Particulars Gross Profit Gross Sales Gross Profit Margin Gross Profit Rate Year 1 Year 2 214,-,-,-,-% 38.31% Year 3 302,-,-% Investment Decision Analysis Return on Investment The table below shows that the return on investment in relation to the investment cost is 50% taking into consideration the three-year projection period. Table 15. Return on Investment Year Year 1 Year 2 Year 3 Total Divided by Projection Period Average Income Total Project Cost Return on Investment Net Income 106,-,-,-,-,-,-% Payback Period Being stated in the table next page is the length of time before the investment can be recovered which is one year, seven months and 21 days. Payback period is shorter compared to the projection period. Table 16. Payback Period Net Income + Depreciation 153,-,566.21 Year Year 1 Year 2 Total Project Cost Less: Cumulative Total where investment is to be recovered Total Amount to be recovered Divided by: Net Income + Depreciation where the investment is recovered Quotient Years Months Days Cumulative Total 153,-,296.38 Payback Period 1 271,-,-,-,- 1 7 21 Net Present Value The table below shows a net present value of the project expansion amounting to P208, 195.80 which indicates that the total cash flows exceeds the cost of investment taking into consideration the net cash flows and discount factor. Table 17. Net Present Value Year 1 2 3 Total Less: Total Project Cost Net Surplus VI. SOCIAL BENEFITS 6.1. Direct Benefits Net Cash Flow Discounted Factor PV at 5.0%-,-,-,608.47 Discounted Cash Flow 146,-,-,-,-,-,195.80 Through this business expansion of the association, additional income will be given to the members. In the long run, it is the goal of the group to provide employment that gives enough compensation to support the family of the member/workers. Also, increase production/sales would mean higher patronage refund. This project will gradually promote marine conservation in Asuncionsince fishers will now avoid illegal fishing and a standard fish size will be followed that will allow the fish to grow and multiply. 6.2. Indirect Benefits Producing high quality local products can help promote the place of Asuncionand even Cantilan in general that can serve as trademark of the place. By producing more value-added products, cash inflows of the island will increase which can promote a domino effect within the locality. The business will set a competitive price for raw materials since these will be needed for regular production. VII. SUPPORTING SCHEDULES Schedule 1. Production Volume (Dried Flying Fish) Particulars Fresh Fish (Kgs) Multiply by : Recovery Rate Production Volume (Kgs) Less: Reject (5%) Product Volume after Deducting the Reject (in Kgs) Multiply by No. of Production/Month Production Volume Monthly (Kgs) Multiply by No. of Production per Year Production Volume Annually (in Kgs) Divide by Weight/Pack (in Kgs) Production Volume Annually (in Packs) Year 1 10 20%-,267 Year 2 11 20%-,393 Year 3 12.1 20%-,533 Year 2 5.5 20%- Year 3 6.05 20%- Schedule 2. Production Volume (Dried Anchovy) Particulars Fresh Fish (Kgs) Multiply by : Recovery Rate Production Volume (Kgs) Less: Reject (5%) Product Volume after Deducting the Reject (in Kgs) Multiply by No. of Production/Month Production Volume Monthly (Kgs) Multiply by No. of Production per Year Production Volume Annually (in Kgs) Divide by Weight/Pack (in Kgs) Production Volume Annually (in Packs) Year 1 5 20%- Schedule 3. Production Volume (Marinated Flying Fish) Particulars Fresh Fish (Kgs) Multiply by : No. of Pieces/Kg Production Volume (in Pieces) Multiply by No. of Production/Month Production Volume Monthly (in Pieces) Multiply by No. of Production per Year Production Volume Annually (in Pieces) Year-,400 Year-,540 Year-,694 Schedule 4. Production Volume (Bottled Flying Fish) Particulars Year 1 Fresh Fish (Kgs) Production Volume in Bottles Multiply by No. of Production/Month Production Volume Monthly (in Bottles) Multiply by No. of Production per Year Production Volume Annually (in Bottles) - Year- Year 3 Year-,880 Year-,120 - Schedule 5. Production Volume (Kolo Chips) Particulars Year-,640 No. of Kolo (in Pieces) Production Volume (in Packs) Multiply by No. of Production/Month Production Volume Monthly (in Packs) Multiply by No. of Production per Year Production Volume Annually (in Packs) Schedule 6. Sales Ratio Particulars Dried Fish (Flying Fish) Dried Fish (Anchovy) Marinated Fish Bottled Fish Kolo Chips TOTAL Percentage 22% 19% 8% 14% 36% 100% Schedule 7. Direct Materials (Dried Flying Fish) - Year 1 Particulars Flying Fish Ice Salt Packaging Total No. of Units Unit 10 Pieces 5 Kgs 0.92 Kgs. Unit Cost- Per Per Month Production 800.00 8,-,-,068.00 1,-,601.33 Year 1 40,000.00 1,-,-,-,006.67 Schedule 8. Direct Materials (Dried Flying Fish) - Year 2 Particulars Flying Fish Ice Salt Packaging Total No. of Units Unit 11.00 Pieces 5.50 Kgs 1.01 Kgs. Unit Cost- Per Per Month Production 924.00 9,-,-,850.60 1,-,016.60 Year 2 46,200.00 1,-,-,-,083.00 Schedule 9. Direct Materials (Dried Flying Fish) - Year 3 Particulars Flying Fish Ice Salt Packaging Total No. of Units Unit 12.10 Pieces 6.05 Kgs 1.11 Kgs. - Unit Cost- Per Per Month Production 1,-,-,-,760.53 2,-,812.26 Year 3 53,361.00 1,-,-,-,061.30 Schedule 10. Direct Materials (Dried Fish - Anchovy) - Year 1 Particulars Anchovy Ice Salt Packaging Total No. of Units Unit 5 Kgs 2 Kgs 0.92 Kgs Unit Cost- Per Per Month Production 250.00 3,-,-,-,340.00 Year 1 15,-,-,-,360.00 Schedule 11. Direct Materials (Dried Fish - Anchovy) - Year 2 Particulars Anchovy Ice Salt Packaging Total No. of Units 5.5 Kgs 2.2 Kgs 1.012 Kgs Unit Unit Cost- Per Per Month Production 288.75 4,-,-,-,097.70 Year 2 17,-,-,-,390.80 Schedule 12. Direct Materials (Dried Fish - Anchovy) - Year 3 Particulars No. of Units Anchovy Ice Salt Packaging Total Unit 6.05 Kgs 2.42 Kgs 1.1132 Kgs Unit Cost- Per Per Month Production 333.51 5,-,-,336.10 1,-,127.84 Year 3 20,-,-,-,511.37 Schedule 13. Direct Materials (Marinated Flying Fish) - Year 1 Particulars No. of Units Flying Fish Vinegar - Coconut Vinegar - Sugarcane Garlic Black Pepper Packaging Total 7 0.5 1 5 1 Unit Kgs Gallon Liter Balls Pack (25 g) Pieces Unit Cost- Per Per Month Production 560.00 2,-,-,700.00 Year 1 14,-,-,500.00 Schedule 14. Direct Materials (Marinated Flying Fish) - Year 2 Particulars No. of Units Flying Fish Vinegar - Coconut Vinegar - Sugarcane Garlic Black Pepper Packaging Total - Unit Kgs Gallon Liter Balls Pack (25 g) Pieces Unit Cost- Per Per Month Production 646.80 3,-,617.00 1,085.70 5,428.50 Year 2 16,170.00 1,-,-,142.50 Schedule 15. Direct Materials (Marinated Flying Fish) - Year 3 Particulars No. of Units Flying Fish Vinegar - Coconut Vinegar - Sugarcane Garlic Black Pepper Packaging Total - Unit Kgs Gallon Liter Balls Pack (25 g) Pieces Unit Cost- Per Per Month Production 747.05 3,-,867.64 1,253.71 6,268.54 Year 3 18,676.35 1,-,-,342.70 Schedule 16. Direct Materials (Bottled Fish) - Year 1 Particulars Flying Fish Ice Corn Oil Condiments Bottle Total No. of Units Unit 5 Kgs 2.5 Kgs 1.25 Liter 32 Bottles Unit Cost- Per Per Month Production 400.00 2,-,-,160.00 1,167.17 5,835.83 Year 1 10,-,312.50 2,-,-,179.17 Schedule 17. Direct Materials (Bottled Fish) - Year 2 Particulars Flying Fish Ice Corn Oil Condiments Bottle Total No. of Units Unit 5.5 Kgs 2.75 Kgs 1.375 Liter 35 Bottles Unit Cost- Per Per Month Production 462.00 2,-,-,480.63 1,333.59 6,667.94 Year 2 11,-,135.94 2,-,-,339.69 Schedule 18. Direct Materials (Bottled Fish) - Year 3 Particulars Flying Fish Ice Corn Oil Condiments Bottle Total No. of Units Unit 6 Kgs 3 Kgs 1.51 Liter 39 Bottles Unit Cost- Per Per Month Production 529.20 2,-,-,902.33 1,530.96 7,654.80 Year 3 13,-,087.01 3,-,-,273.98 Schedule 19. Direct Materials (Kolo Chips) - Year 1 Particulars Kolo Cooking Oil Tissue Roll Packaging Subtotal Freight Total No. of Units 10 4 2 22 Unit Pieces Kgs Roll Packs Unit Cost- Per Per Month Production 100.00 2,-,-,-,-,-,320.00 Year 1 12,-,800.00 9,-,-,520.00 2,-,920.00 Schedule 20. Direct Materials (Kolo Chips) - Year 2 Particulars No. of Units Kolo Cooking Oil Tissue Roll Packaging Subtotal Freight Total - Unit Unit Cost Pieces Kgs Roll Packs - Per Per Month Production 115.50 2,-,-,-,-,-,986.00 Year 2 13,-,-,-,-,396.00 2,-,916.00 Schedule 21. Direct Materials (Kolo Chips) - Year 3 Particulars No. of Units Kolo Cooking Oil Tissue Roll Packaging Subtotal Freight Total - Unit Unit Cost Pieces Kgs Roll Packs - Per Per Month Production 133.40 2,-,-,-,-,-,862.77 Year 3 16,-,-,-,-,530.62 2,-,176.62 Schedule 22. Cost of Labor Particulars Dried Fish (Flying Fish) Dried Fish (Anchovy) Marinated Fish Bottled Fish Kolo Chips Year- Year- Year- Schedule 23. Label Particulars Dried Flying Fish Dried Anchovy Marinated Fish Bottled Fish Kolo Chips Total Monthly-,666.80 Year 1 2,534.00 1,600.00 2,800.00 1,600.00 5,-,814.00 Year 2 2,925.30 1,848.00 3,234.00 1,837.50 6,-,892.80 Year 3 3,380.27 2,134.44 3,735.27 2,149.88 6,-,279.45 Schedule 24. Production Cost per Unit (Dried Flying Fish) Particulars Direct Materials Direct Labor Production Overhead Total No. of Units Production Cost/Unit Year 1 78,-,-,-,852.41 1,- Year 2 90,-,-,-,091.29 1,- Year 3 104,-,-,-,604.83 1,- Schedule 25. Production Cost per Unit (Dried Anchovy) Particulars Direct Materials Direct Labor Production Overhead Total No. of Units Production Cost/Unit Year 1 45,360.00 7,-,-,- Year 2 52,390.80 8,-,-,- Year 3 60,-,-,-,- Schedule 26. Production Cost per Unit (Marinated Fish) Particulars Direct Materials Direct Labor Production Overhead Total No. of Units Production Cost/Unit Year 1 23,500.00 4,375.00 5,-,036.34 1,- Year 2 27,142.50 5,053.13 5,-,444.00 1,- Year 3 31,342.70 5,836.36 5,-,542.46 1,- Schedule 27. Production Cost per Unit (Bottled Fish) Particulars Direct Materials Direct Labor Production Overhead Total No. of Units Production Cost/Unit Year 1 29,179.17 3,125.00 8,-,- Year 2 33,339.69 3,609.38 8,-,- Year 3 38,273.98 4,134.38 8,-,- Schedule 28. Production Cost per Unit (Kolo Chips) Particulars Direct Materials Direct Labor Production Overhead Total No. of Units Production Cost/Unit Year 1 73,-,-,-,566.41 2,- Year 2 83,-,-,-,777.55 2,- Year 3 95,-,-,-,691.97 3,- Schedule 29. To be Acquired Facilities and Equipment Particulars Year 1 Kolo Chipper Solar Panel Subtotal Year 2 Plastic Boots Weighing Scale (5 kg) Chopping Board (white) Chopping Board (blue) Scissor Measuring Cup Measuring Spoon Plastic Crates (white) Plastic Crates (black) Plastic Tray Apron Strainer Subtotal Year 3 Weighing Scale (25 kg) Weighing Scale (60 kg) Banyera Stainless Basin (small) Stainless Basin (medium Stainless Basin (large) Aluminum Tray Stainless Knife (black handle) Stainless Knife (rosette) Stainless Knife (white handle) Excel Cooker Knife (brown hanndle) Tramontina Knife (white handle) Ice Box (small) Rubber Made Cooler Subtotal Total Quantity Unit Cost Total Cost EUL Annual Depreciation 1 1 30,-,000.00 30,-,-,000.00 5 5 6,000.00 4,-,000.00 - - 2,-,-,661.50 - 1,-,830.75 - 1,035.00 1,-,025.00 1,035.00 1,725.00 2,-,-,-,835.00 - -,341.67 4,-,775.75 Schedule 30. Annual Depreciation Particulars Solar Dryer Chest Freezer Stainless Table 3" x 3" Stainless Table 3" x 8" Stainless Table with Sink Vacuum Sealer Plastic Boots Weighing Scale (5 kg) Weighing Scale (25 kg) Weighing Scale (60 kg) Chopping Board (white) Chopping Board (blue) Scissor Measuring Cup Measuring Spoon Banyera Stainless Basin (small) Stainless Basin (medium Stainless Basin (large) Plastic Crates (white) Plastic Crates (black) Plastic Tray Aluminum Tray Apron Single-Burner Stove Pressure Cooker Strainer Stainless Knife (black handle) Stainless Knife (rosette) Stainless Knife (white handle) Excel Cooker Knife (brown hanndle) Tramontina Knife (white handle) Ice Box (small) Rubber Made Cooler Kolo Chipper Solar Panel Total Year 1 6,850.00 2,520.00 1,900.00 2,400.00 2,-,000.00 1,-,166.67 6,000.00 4,-,377.50 Year 2 6,850.00 2,520.00 1,900.00 2,400.00 2,-,000.00 1,-,166.67 6,000.00 4,-,725.75 Year 3 6,850.00 2,520.00 1,900.00 2,400.00 2,-,000.00 1,-,341.67 6,000.00 4,-,370.75 Schedule 31. Accumulated Depreciation Particulars Solar Dryer Chest Freezer Stainless Table 3" x 3" Stainless Table 3" x 8" Stainless Table with Sink Vacuum Sealer Plastic Boots Weighing Scale (5 kg) Weighing Scale (25 kg) Weighing Scale (60 kg) Chopping Board (white) Chopping Board (blue) Scissor Measuring Cup Measuring Spoon Banyera Stainless Basin (small) Stainless Basin (medium Stainless Basin (large) Plastic Crates (white) Plastic Crates (black) Plastic Tray Aluminum Tray Apron Single-Burner Stove Pressure Cooker Strainer Stainless Knife (black handle) Stainless Knife (rosette) Stainless Knife (white handle) Excel Cooker Knife (brown hanndle) Tramontina Knife (white handle) Ice Box (small) Rubber Made Cooler Kolo Chipper Solar Panel Total Year 1 6,850.00 2,520.00 1,900.00 2,400.00 2,-,000.00 1,-,166.67 6,000.00 4,-,377.50 Year 2 13,700.00 5,040.00 3,800.00 4,800.00 5,-,000.00 1,-,-,-,-,-,000.00 8,-,620.75 Year 3 20,550.00 7,560.00 5,700.00 7,200.00 8,-,000.00 2,-,-,-,-,-,-,391.50