Price

Shenrice price per piece is P10.00. Shenrice Company used Mark-up method to compute for the
price. Wherein:

Mark up percentage: 35%

Raw Materials: P438139.20

Packaging Materials: P28771.20

Tools and Equipment: P4560

Utilities Expense: P33900

Salaries Expense: P179040

Total Expense: P684410.40

Total Units: 96000 for the 1st year

Mark up = (total expense/unit) x mark-up percentage

= (684410.40/96000) x .35

= 2.49

Price = (total expense/unit) + mark-up

= (684410.40/96000) + 2.49

= 7.13 + 2.49

= P10.00
FINANCIAL PROJECTION

Break-even Analysis

BEP in Units = Fixed Cost/ (Price – Variable Cost)

= 217500/ (10 – 4.86)

= 42315.18 units

Projected Profit or Loss

Shenrice Company anticipated sales of P960000, P1200000, and P1440000 for the 1st, 2nd, 3rd
year respectively.

400 x 5 days = 2000 pieces per week

2000 x 4 weeks = 8000 pieces per week

P10 x 8000 = P80000 sales per month

P80000 x 12 months = P960000 1st year sales

500 x 5 days = 2500 pieces per week

2500 x 4 weeks = 10000 pieces per week

P10 X 10000 = P100000 sales per month

P100000 x 12 months = P1200000 2nd year sales

600 x 5 days = 3000 pieces per week

3000 x 4 weeks = 12000 pieces per month

P10 x 12000 = P120000 sales per month

P120000 x 12 months = P1440000 3rd year sales

3-years Projected Income Statement

Year 1 Year 2 Year 3

Sales P960000 P1200000 P1440000
Less: Direct Cost of Sales (466953.36) (583166.64) (656880)
Gross Profit 483046.64 616833.36 783120
Gross Margin % 51.36% 51.40% 54.38%
Less: Expenses
Payroll 89520 89520 89520
Sales and Marketing Expense 89520 89520 89520
Depreciation Expense 612 1224 1836
Utilities expense 33900 33900 33900
Total Operating Expenses 213552 214164 214776
Net Profit P279494.64 P402669.00 P568344.00
Net Profit/Sales 29.11% 33.56% 39.47%

3-years Projected Cash Flow

Year 1 Year 2 Year 3

Cash Sales P960000 P1200000 P1440000
Subtotal cash from operations P960000 P1200000 P1440000
Expenditures
Cash Spending 179040 179040 179040
Bill Payments 181128 216132 265137.60
Subtotal spent on operations 360168 395172 444177.60
Additional Cash Spent
Purchase of Assets 4560 0 0
Subtotal Cash Spent 4560 0 0
Net Cash Flow P595272 P804828 P995822.40
Cash Balance P595272 P1400100 P2395922.40
Balance Sheet

Year 1 Year 2 Year 3

Assets
Current Asset
Cash P29098.64 P13497.36 P10396
Other Current Assets 466953.36 583166.64 656880
Total Current Assets 496052 596664
Long-term Assets
Long-term Assets 4560 4560 4560
Accumulated Depreciation 612 1224 1836
Total long-term Assets 3948 3336 2724
Total Assets P500000 P600000 P670000
Liabilities and Capital
Long-term Liabilities 250000 200000 100000
A, Capital 41666.67 66666.67 95000
B, Capital 41666.67 66666.67 95000
C, Capital 41666.67 66666.67 95000
D, Capital 41666.67 66666.67 95000
E, Capital 41666.67 66666.67 95000
F, Capital 41666.65 66666.65 95000
Total Liabilities and Capital P250000 P600000 P670000