Professional Documents
Culture Documents
Mumshy Mushroom
Mumshy Mushroom
Mumshy Mushroom
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___________________
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By:
May 2018
ACKNOWLEDGMENT
The researchers would like to express their deepest sense of gratitude to each one
To Almighty God for His spiritual guidance and blessings throughout this study;
To Ms. Ma. Jennifer R. Marquez, the researchers’ adviser, for her guidance, opinions,
moral support and encouragement for the researchers not to give up on this study – before,
during and after the defense, and for imparting her knowledge to them;
To the panel of examiners – Mr. Lord Gen A. Rilloraza and Ms. Kamille M. Bagwel, for
evaluating the researchers’ manuscript during the final defense and giving advice to
To the chosen respondents, for allotting their time and effort to answer the
To the beloved parents of the researchers, for the unending moral, financial and
And to those not mentioned who helped the researchers in any way possible, whose
assistance and support aided the researchers in making this study a success.
Utilities ............................................................................................................................................................................. 43
Customer ......................................................................................................................................................................... 78
Government ................................................................................................................................................................... 79
1
PROJECT SUMMARY
This chapter highlights key information about the enterprise including in-depth
descriptions of its name and logo, location, and long-range objectives reflecting its vision and
mission statements. It also includes the standards on which the project’s feasibility is based on,
the details on the development and the summary of the major assumptions and conclusions of
the project.
The business enterprise was named Mumshy Mushroom Enterprise, which also happens
to be the name of the product that the company offers. The name wishes to lift the curiosity of
the public, which creates an advantage for the company in terms of marketing the product.
B. Business Logo
2
The logo of Mumshy Mushroom signifies all the ever loving and caring mothers that
have filled their children with tenderness, hope and faith. Color Blue represents wisdom,
freedom, and also encouragement to live and to laugh. The logo is also circular because it
portrays the unending love and support of a mother. This is in line with the objectives of the
The proposed location will be at #15 Magsaysay Private Road, Baguio City. The location
will accommodate the production site. The proponents decided on renting the establishment
on the said location for it has a large space at a reasonable lease price amounting to Php
D. Vision Statement
Our vision is to continuously improve our operations in order to increase value to our
customers, enhance the lives of our employees and their families, contribute to our community,
create new business opportunities, lead our industries and, as a result, change our world.
E. Mission Statement
Create value for customers, employees and the community through the consistent
production of top quality mushrooms in a culture that fosters respect, employee development
and creativity.
3
F. Long-term Objectives
The enterprise is basically established to make profit, which is the purpose of most of
the establishments of any business enterprise. The partners established the enterprise to be
able to produce and sell the best mushrooms at a reasonable price. They aspire to establish and
G. Feasibility Criteria
demands for the project, product or service which are unsatisfied. The business does not only
focus on its profitability but also with what it can contribute to the government, employment,
representing the population said that they are willing to avail the product that will be offered if
the business is going to be established. This shows that there is high percentage of acceptance
History
planted mainly in rice straw. Mumshy Mushroom was established when four group of
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friends had an idea of creating its own organic farm. With great minds all put together,
they came up with a business that is close at heart of the people in Baguio, modern
farming. With more health conscious yet fast paced people demanding for “healthy
food”, the product was believed by the proponents to be perfect for this.
Time table
The project timetable will show the proponents’ plans on how they will conduct
2018 2019
Activities
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
1. Preparation of the
Feasibility Study
2. Procurement of Funds
3. Processing of
Necessary Papers
4. Renovations
5. Acquisition of Tools
and Supplies Needed
6. Hiring of Employees
7. Advertisement
8. Opening of the
Business
Gantt Chart
5
Nature of Industry
The nature of the kind of the proposed business would be manufacturing. It will
derive its revenues from the sale of the product. Mumshy Mushroom will provide a
Mode of Financing
The capital for the project will be coming from the contributions of the partners,
which will be in the form of cash. The partners will accumulate their personal
contributions through borrowings from family and relatives and will also use some of
their savings. The partners will contribute Php 52,062.45 each for a total of Php 208,
Market Feasibilty
The company expects that the product will be patronized because of its
affordability and health benefits. The proponents will sell a kilogram of mushroom for
Demand and supply analysis shows that there exists a substantial demand on the
product. Unsatisfied demands for the year 2018 to 2022 are 3,719,095.71, 3,770,213.85,
3,821,705.25, 3,873,582.59, 3,925,858.75, respectively. Market share for the year 2018
6
is 0.13% and it increases gradually by 0.02% per year. This provides a favorable picture
Technical Feasibility
The manufacturing site and office will be situated in No.15 Magsaysay Private
Road, Baguio City. The operating hours of the business will be from 8:00 AM- 5:00 PM,
Monday to Saturday. The enterprise will produce 100- 120 kgs, 100 kgs as normal
capacity of mushrooms per week for a normal annual produce of 4,800 kgs of
mushrooms.
The proponents have decided to hire 3 employees with the skills and aequate
Total project cost amounted to Php 208,249.79. This amount will be coming
Financial Feasibility
throughout the first five years of operations. The study indicated that the payback
period would be 1.24 years from the initial operations. The following figures are the
return on assets for the first five years of operation: 0.37, 0.88, 0.81, 0.76, and 0.71.
These figures are considered good indicators on how efficient management is at using
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its assets to generate earnngs. Furthermore, return on equities are as follows: 0.30,
Management Feasibility
Mumshy Mushroom is a partnership consisting of four (4) partners who will have an
The enterprise will be composed of the general partners and three employees.
Socio-Economic Feasibility
Other than the benefits that will get by the owners, this part of the proponents’ study is
mainly focused in giving concerns to the people, entities and the community. The
enterprise can give opportunity of employment to those unemployed that will give them
additional income that will help in sustaining their needs. It will observe proper waste
disposal for the preservation of the environment and it will provide food supplement for
the community. Payment of taxes will serve as additional revenue of the city
government. Since tax is the lifeblood of the economy and should be collected without
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unnecessary hindrance, the payment of taxes must be executed for it will serve as
additional revenue of the city that will be used to finance and support different projects.
Accounting study consists of the different business papers and forms to be used
by the business, chart of accounts and accounting records, internal controls that must
be performed, and the different transaction cycles. Three cycles are cited in the study:
transaction cycle, revenue and receipt cycle, and disbursement cycle. These different
cycles were made for the proper and correct order of processes to be done by the
employees.
assets, prevention and detection of fraud and error, accuracy and completeness of the
Balance sheet and operating accounts in the Chart of Accounts are described for
the proper and correct classification and recording of transactions in the book of
accounts. These are also used for the management’s analysis of the financial data.
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MARKET STUDY
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CHAPTER II
MARKET STUDY
situations where the product can be identified through the demand analysis. During this phase
the business proponents will inspect how to cope with the needs and wants of the customers,
discovering opportunities about it, launch and market the service, achieve customers’ loyalty
and patronage, identifying existing competition, and other market area influences.
Questions of demand are also highlighted in this area, which helps create and pin point
horizons and business opportunities to cater to people need. While it is true that profitability is
the trigger point of a project feasibility study, it would not be possible if no market study exists.
A. PRODUCT DESCRIPTION
The business should be named uniquely or in such a way that people can easily
remember it. With that, the business proponents chose to use Mumshy Mushroom as
addition to any meal. Mushrooms are also high in nutrients. According to a study
niacin, and vitamins B-1 and B-2. The study concluded that consuming oyster
requirements. (https://www.livestrong.com/article/348755-oyster-mushroom-health-
benefits/)
As of this day, there are a lot of emerging ways that prove mushrooms are
useful. Mushrooms aren’t just for stir-fry and psychedelic experiences anymore.
from 11 - 65 years old are the target market. Considering the Philippine Statistics
Authority’s most recent census that majority of the population in Baguio City are
employees and students, they will be regarded as the primary users of the product.
Geographical Area
Baguio City is the target market of the enterprise because it is fully developed
and has a large population. The products will be made available within the territorial
boundaries of Baguio City. The Business will conduct its operation at No. 15 Magsaysay
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B. DEMAND ANALYSIS
Analyzing demand for such product is an essential task in determining the needs
of the consumers and identifying their willingness to avail the product. It is also used to
determine whether the product will be able to penetrate the market and satisfy
customer’s needs and wants considering their taste and preferences given the evident
number of competitors.
Year Population
2013 259,652
2014 263,547
2015 267,500
2016 271,513
2017 275,586
The table shows the historical population of Baguio City for the year 2013-2017.
The data was acquired from Philippine Statistics Authority in Baguio City.
The proponents used the Slovin’s Formula with 5% margin of error and 95%
degree of confidence to determine the sample size for the feasibility study.
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The Computation is as follows:
n= ____N_______
1+ Ne^2
Where:
n= sample size
N= Population size
e= margin of error
= 275,586
(1 + 275,586) (0.052))
= 399.42
= 400
The latest population of 275,586 was used to determine the sample size in which
will be reflected as the number of people who will avail the product and are the
Number of
Responses Percentage
Respondents
Yes 224 56%
No 176 44%
Total 400 100%
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Table 2 shows that 56% out of the 400 respondents in Baguio City buy
mushrooms. Although percentage is not that high, this still indicates the presence of a
potential market.
Table 3 presents how often the respondents buy mushrooms. It shows that most
of the respondents from Baguio City buy mushrooms once or twice a year with 95 out of
Moreover, it shows a possibility for growth in the demand and consumption of the
product.
15
Based on Table 4, it shows that most consumers tend to purchase ¼ kilogram of
mushroom.
Table 5 shows that 84% or 334 out of the 400 respondents are willing to buy
from Mumshy Mushroom. Through the information above, the proponents concluded
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Most of the respondents said they are willing to buy from Mumshy mushroom
once a month. A significant number also said they would buy weekly and twice a week.
The table shows how often and how many kilograms of mushrooms are bought
17
Table 9 shows the annual consumption of individuals. The annualized demand
will be used to compute the consumption rate that will be used to find the historical
demand.
224
Table 10 shows the demand of the previous years. These figures will be used as a
basis in forecasting future market behavior and to know the consumption of the product.
The table portrays the demand population for the consumption of the product on the
18
It’s safe to say there is a reasonable amount of actual projected demand. It can
be seen that there will be ample demand for mushrooms for the next five years.
Supply analysis is a task wherein the direct competitors are identified and classified
according to its size, product quality, location, performance and market segment performance.
It also evaluates the growth pattern of supply and projects its future supply by applying
The proponents gathered information from their competitors through giving them
questionnaires regarding their monthly production capacity and the change of the percentage
of their sales from the last year operation. This can help the proponents to decide on how many
pieces to produce in a day and how much the price will be. With the 9 competitors we have
mushroom and their rate of increase in yearly sales. All respondents indicated an
19
increase in sales. The data shows that existing sellers of the product can sell a
the historical supply, the total rate of increase is divided by the number of total
respondents.
20
Table 15: Historical Supply
Year Supply
2013 21,048.45
2014 23,995.24
2015 27,354.57
2016 31,184.21
2017 35,550
The Statistical Parabolic Method will be used in the projection for the next five
years since it has the smallest standard deviation. This means that it has less significant
risk in comparison to the other methods. This serves as the basis to provide reliable
21
Year Y X X² X⁴ XY X²Y a b (x) c X² Yc Y - Yc (Y - Yc)²
2013 21,048 -2 4 16 -42,097 84,194 27,354 3,619.21 -2 236 4 21,060.70 -12.24 149.93
2014 23,995 -1 1 1 -23,995 23,995 27,354 3,619.21 -1 236 1 23,970.98 24.26 588.45
2016 31,184 1 1 1 31,184 31,184 27,354 3,619.21 1 236 1 31,209.39 -25.18 634.13
2017 35,550 2 4 16 71,100 142,200 27,354 3,619.21 2 236 4 35,537.52 12.48 155.64
Σ = 1,528.63 a = 27,353.69
Y= a + bx + cx2 b= ΣxY
n (Σx4) – (Σx2)2 x
c = 236.36 σ = 17.4
Projected values a b x c X² Yc
2018 27,354 3,619.21 3 236 9 40,338.27
2019 27,354 3,619.21 4 236 16 45,611.64
2020 27,354 3,619.21 5 236 25 51,357.62
2021 27,354 3,619.21 6 236 36 57,576.22
2022 27,354 3,619.21 7 236 49 64,267.44
The projected supply will then be used to determine the unsatisfied demand and the market share of the business.
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D. Demand and supply analysis
The demand supply analysis is compared to determine the unsatisfied demand for the
product. This would then be used as a basis in coming up with a certain percentage of market
The unsatisfied demand table represents the respondent’s willingness to buy our
product. The table shows that as the year progresses, there is an increase in amount of
unsatisfied demand but the supply is not sufficient enough to recover the increasing
demand for each year. This means that the business has a place in the market. The
E. PRICE STUDY
As a new business in the market, there are factors that would take into consideration in
pricing the product. The first factor taken in pricing the product that should be taken into
consideration is the cost of raw materials and equipment that the proponents are going to use
in the production and second are the prices set by the enterprise; competitors.
The proponents are going to price the product based on these factors and make sure
that the price is profitable enough for the enterprise and convenient to the customers as well.
Aside from that, the proponents make sure that the price is worth it to satisfy what the
customers want. It is also based on the prices of the existing competitors in the market. The
enterprise should know the average price of the product of their competitors; enable them to
be competitive in the market. The average competitor’s price for 1000g or 1kg of mushroom is
Php 220.
Based on these informations, the proponents decided to price their product at a mark-
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F. FACTORS AFFECTING MARKET
This section will discuss the different factors that will affect the demand and supply in
the mushroom agriculture industry. It will help ensure the enterprise’s position and condition in
the market by determining on how to deal with these factors during the production.
a. Population Growth
the population increases, the demand will also increase which constitutes a greater
profitability and decrease in population, on the other hand, can cause a decrease in the
profitability.
and in populous areas lest not forget to advertise also in rural areas to maximize the
demand.
b. Economic Growth
goods at present, consumers would buy products in accordance to their budget and the
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Therefore, the enterprise intends to sell the product at a reasonable price and in
best quality resulting to the satisfaction of the consumer’s desired price and the quality
Consumer tastes and preferences are key factors affecting the purchase
using knowledge about attributes that consumers demand and also consumers taste
and preference would vary from time to time with this factor consumers tend to look
for products that will satisfy their wants and needs. Usually, after trying new products,
consumers who were satisfied, they tend to advertise it themselves. The more
consumers are satisfied, the more the product will have free advertisement. The
enterprise wants to create a unique experience in the business and try to come up with
d. Consumer’s Income
Consumer income determines the ability of a person to buy goods and services.
If the income of the person is low, the capacity to buy the product in the market is also
low which tend to save money. Thus, it affects the income of the product wherein the
consumers who have enough income can purchase our product that introduced in the
market. This would increase the capacity of earners to satisfy their needs because they
have means to buy things and goods. If the capability of a consumer to buy the product
27
is higher, the better income will gain. It would mean that if people will have higher
income, the demand for the products of Mumshy Mushroom would also increase.
The number of suppliers and competitors has a direct effect on the market. The
market supply curve is the horizontal summation of the individual supply curves. As
more firms enter the industry, the market supply curve will shift out driving down
while less competition gives the producer an opportunity to have a bigger market share
b. Price of Input
The raw materials that are needed in the production can affect the supply
because the cost can be greater than what is expected. Technically, if the price of raw
materials goes up or down, it affects the production of the goods to be sold. Mumshy
Mushroom will be priced at Php 200 for 1 kilogram pack of mushroom. Considering the
price of the competitors, Mumshy is cheaper. However, the selling price is assured to be
relative to its cost of production and expenses and has already a substantial mark-up.
The proponents also considered the capacity of the consumers to spend for such
product.
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G. Marketing Program
Promotion
Introducing a product in the market is a way to induce target markets to buy the
product. This will also allow the market to have an idea about how the product will
benefit them or satisfy their cravings or curiosity. Furthermore, this will increase the
probability of having potential customers that might refer the product to other buyers
and then turn to potential customers too. The researchers have provided techniques to
market the products of Mumshy Mushroom and these are the following:
1. Flyers
product. These show the price of the product, benefits, location of the
store, and shows how consumers will contact the enterprise. In the first
year of operation, the proponents expect to spend Php 750.00 for the
Nowadays, more and more people use social media sites and
online browsers to look for products in the market around their area.
Thus, this will induce the market opportunity of the enterprise. Mumshy
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TECHNICAL STUDY
30
CHAPTER II
TECHNICAL STUDY
This chapter was designed to discuss the production process, product description, and
plant facilities layout. It also includes the product cost and the pricing of them. Equipment,
Today, the production and cultivation of mushrooms can directly have a positive impact
contributions. Many people buy oyster mushrooms at an expensive price for it is considered a
luxury food for urban consumers, thus making the number of people buying mushrooms to
decrease. However many still wanted to avail of the edible fungi that provides good source of
Protein, Iron, Magnesium, Zinc etc…, and also provides income for horticultural farmers.
Ganoderma or oyster mushrooms and a possible source of income with abundant production. It
contains many Vitamins and minerals but is low in sugar and fat. It can be grown in artificially
created and controlled environment that is suitable for urbanized communities for instance
Baguio City. There are only few horticulture farmers that focus on this product. We aim to be
the best providers to cater the needs of our market/clients when it comes to mushroom
production.
A. PRODUCTION PROCESS
The process in producing oyster mushrooms will be done daily. Shown below is the
systematic process wherein it specifies the step-by-step procedure that the firm will be
1. Preparing tools, materials and production place (20 mins.)- Identifying and cleaning
can be controlled to grow mushrooms in; a growing area that can retain moisture in the
air, shaded with some light. Prepare 100 kg rice straw, 2 kg slaked lime for limewater,
and 10kg rice husks for added germination. Plastic bags with pre-cut holes for
containing the mushroom spawn. Water spray to increase humidity within growing
room. 4 shovels, clean gloves, face masks to look the part when inoculating straw and
prevent contamination when mixing and inoculation the rice straw soaked in lime
water. 100 kg Rice Straw is used as the medium for growing the mushrooms in. The
straw is left in the limewater for 3 days, so that it is thoroughly soaked. The straws then
piled up on a 2 storage boxes Size (cm): L72.3 / W52.0 / H44. The top of the pile should
3. Bagging ( 1 hour and 40 mins) Prepare clear plastic bags 20 x 30 cm with pre-cut
hole for containing the rice straw soaked with limewater . Open the bags of rice straw
soaked in limewater. Taking a sterile shovel into the straw, breaking it up and mixing
32
lightly. For added germination rice husks may be added. The more spawn you add, the
faster the substrate will be colonized. Fill 3/4 part of each plastic bag, seal properly with
4. Incubation (1 days) - The mushroom should be provided with required water, growth
factors, trace elements and other growth conditions. Restrict the opening of the bag by
placing a rubber band (or cord) around the bag's to reduce the chances of
contamination and insect infestation. It is important to monitor the bags for any sign of
5. Fruiting (6-7 days)- Oyster Mushroom initials develop after root like aggregation of
fungi appear in the casing. Too little moisture can also result in mushrooms forming
below the surface of the casing. Once an initial grows into a bigger size. Oyster
Mushrooms expand and grow larger through the button stage, and ultimately a
casing. As such mushrooms continue to grow; they push through the casing and are
dirty at harvest time. Contaminated bags with mold infestation should be discarded
while bags with patchy mycelial growth may be left for few more days to complete the
spawn run.
completely in the plastic bag and twisting firmly its base with proper handling, the small
buttons must not be disturbed to grow further. With adequate maintenance and care.
The harvesting stage should occur 3-5 days after you see the first mushrooms begin to
33
form. Watering is resumed when the flush is over. After the straw ceases to produce
mushrooms, it can be fed to livestock or composted. A 45cm x 45cm x 45cm water hose
to clean production place and clean materials to the do the process again.
34
Flowchart of the Production of Oyster Mushrooms
A conservative estimate was made to come up with a material expense per batch.
PRODUCTION COST
Particulars Note Total Cost (php)
Raw Materials 1 45.83
Direct Labor 2 1,016.96
Indirect Materials 3 91.42
Factory Overhead ( Rent and
Utilities Expenses) 4 682.16
Total Production Cost 1,836.37
Divided By: Total kilo
produced per day 14.29
Cost per Unit 128.55
Mark- up (55.5%) 71.34
Selling Price 200
36
Note 3: Indirect Materials- Daily
Items Quantity Unit Cost Total Cost (Php)
Plastic Bags per piece 17 1.25 21
Rubber Band per box 0.17 23.5 3.92
Storage Container 2 800 66.67
Total 91.42
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Schedule 4: 13th Month Pay
Salary 285
Multiply by: Number of Employees 3
Total Salaries per Day 855
Multiply by: Number of Working Days yearly 288
Total Salary 246,240
Divide by: Number of Months 12
13th Month Pay 20,520
Divided by: Number of days in a month 288
13th month pay- Daily 71.25
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Estimate for monthly expenses
100 kgs (10 kgs/ sack) Rice Straw (Payas Rice Php 20 per 40 sacks ₱800
Mill; Located in 6,Mac Arthur Highway,San sack
Jose,Agoo, La Union, 2504). Composted Rice
straw will be used as the main substrate for
the mushroom cultivation.
10 kgs Rice husk (Payas Rice Mill; Located in Php 25 per 4 sack ₱100
6,Mac Arthur Highway,San Jose,Agoo, La sack
Union,2504). Together with the rice straw Risk
husks will also help in the growth and
improvement of the nutrient content of the
mushroom crops.
2 kg Slaked Lime for limewater from Shaman Php 25 per kilo 8 kgs ₱200
Export Goods Slaked lime when mixed reacts
with water and is transformed to calcium
hydroxide that is good in producing good
crops
50 pcs Tesco Plastic bags 20 x 30 cm, This Php 40 per 8 packs ₱320
product will be used as the container for the pack
medium of growing the mushroom crop. The
product will be bought in Tiongsan
Supermarket
50 mg Everlasting Elastic bands. This product Php 23.50 per 4 box ₱94
is used for concealing the plastic bags that will box
be use to prevent from contamination.
Tionsan Supermarket
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Direct Materials
Raw Materials Place of Purchase Quantity Unit Cost Total Cost (Php)
Rice Straw Agoo,La Union 40 sacks 20 per sack 800
Rice Husk Agoo, La Union 4 sacks 25 per sack 100
Lime Water Shaman Export Goods 8 kgs 25 per kilo 200
Total 1100
Indirect Materials
Items Place of Purchase Quantity Unit Cost Total Cost (Php)
Plastic Bags Tiongsan, Harrison 400 pcs 1.25 per piece 500
Rubber Band Tiongsan, Harrison 4 boxes 23.5 94
Storage Container Ace Hardware 2 storage 800 1600
Total 2194
Production Supplies
Items Place of Purchase Quantity Unit Cost Total Cost (Php)
Hand Gloves (per box) Tiongsan, Harrison 1 160 160
Face Mask (per box) Tiongsan, Harrison 1 320 320
Apron Tiongsan, Harrison 4 150 600
Hairnet (per box) Tiongsan, Harrison 1 96 96
Total 1176
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Cleaning Supplies
Items Place of Purchase Quantity Unit Cost Total Cost (Php)
Hand Towel Tiongsan, Harrison 4 20 80
Hand Soap Tiongsan, Harrison 2 12 24
Tissue Per roll Tiongsan, Harrison 6 10 60
Doormat Tiongsan, Harrison 3 25 75
Broom Tiongsan, Harrison 1 100 100
Mop Tiongsan, Harrison 1 175 175
Dust Pan Tiongsan, Harrison 1 45 45
Trash Bin Tiongsan, Harrison 4 66 264
Garbage Bag per pack Tiongsan, Harrison 1 35 35
Total 858
Office Supplies
Items Place of Purchase Quantity Unit Cost Total Cost (Php)
Ballpen (Faber Castle) Tiongsan, Harrison 3 14 42
Calculator (fx-82ES
PLUS) Tiongsan, Harrison 1 500 500
Official Receipt Tiongsan, Harrison 2 85 170
Log Book Tiongsan, Harrison 1 145 145
Record Book Tiongsan, Harrison 1 35 35
Cellphone ( Samsung
keystone) Tiongsan, Harrison 1 800 800
Total 1692
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C. Labor Requirements
Human resource is one of the factors being considered in order to achieve a successful
and effective business; it is the strength of the business. It must also have considerations
regarding on hiring of employees. Employees to be hired must have a wide knowledge and
interest in the business operations of the enterprise. The proponents have decided that it
would hire 3 employees with the skills and adequate basic background in planting. Before they
start, they would undergo an orientation to gain additional knowledge and be familiarized in
the proper way in planting mushroom. The proponents will act as general partners of the
enterprise and they will be responsible in their designated work. The employees will have a
minimum wage, which is Php 285.00, as their compensation. The stated amount is based form
#15 Magsaysay Private Road, Baguio City, which the proponents chose because of its
good accessibility to students and also to residents in Magsaysay area. The measurement of
the location is 13 sq. M x 19.5 sq. M which is enough for the space of enterprise. To fully
operate, the business will need 3 employees for the production and selling of the product. The
enterprise will operate from Monday to Saturday. The enterprise will be opened 24 days in a
month from 8:00 a.m – 5:00 p.m . The enterprise will produce 100- 120 kgs, 100 kgs as normal
capacity of mushrooms per week for a normal annual produce of 4,800 kgs of mushrooms.
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E. Building and Facilities
Mumshy Mushroom will have its operation on a one-story warehouse located at No. 15
Magsaysay Private Road, Baguio City under a long term lease for Php 20,000/month.
The building will be converted into a factory. An amount of Php 6,740 is the estimated
renovation cost. A two hundred fifty square meter facility is sufficient for all the activities of the
business. The space is divided into 6 divisions (1) working area where the mixing and
inoculation/spawning is done and where the plastic bags with re-cut holes are filled with rice
straw, rice husks, and limewater, (2) growing area where the fungus will grow into mushrooms,
(3) storage area where the fully grown mushrooms will be kept, (4) office area where are paper
works are done, (5)Display area where the produced will be displayed and sold and (6)
bathroom. Due to the sensitive nature of growing mushrooms, the building shall be located in a
place free from contaminants; thus, it must be put up in the aforementioned location - one of
Ordinance.
F. Utilities
1.) Electricity
Electricity is essential to enable the lights needed to work during the production
process. Since the production site is mainly located at Baguio, Benguet, BENECO will be
43
The enterprise will approximately incur P 103.59 for the electricity consumption. The
Hours
Particulars Unit Watts Used Days Total KWH Cost
Exhaust Fan 2 45 4 24 8640 1,000 8.64
Light Bulb 6 20 4 24 11520 1,000 11.52
Total KWH
used Monthly 20.16
Multiply by:
Commercial
rate 6.9063
Total Monthly
Electric Bill 139.23
Water tank, pies and faucet are directly installed on production area. Baguio
Water District (BWD) will be our provider of water, it will be used to washed raw
materials, tools and used for cleaning the production area. As a commercial business,
the enterprise will pay the rate of 46.50 a month per cubic meter and approximately pay
44
Total Project Cost
45
Note2: Raw Materials
Total Cost Total Cost
Items Quantity Unit Cost Total Cost (2019) (3 months)
Rice Straw 480 20 per sack 9,600.00 6400 2,400.00
Rice Husk 48 25 per sack 1,200.00 800 300.00
Lime Water 96 25 per kilo 2,400.00 1600 600.00
Total 13,200.00 8800 3,300.00
46
Note 7: Cleaning Supplies
Total Cost Total Cost
Items Quantity Unit Cost Total Cost (2019) (3 months)
Hand Towel 16 20 320.00 213.33 80.00
Hand Soap 24 12 288.00 192 72.00
Tissue Per roll 72 10 720.00 480 180.00
Doormat 12 25 300.00 200 75.00
Broom 2 100 200.00 133.33 50.00
Mop 2 175 350.00 233.33 87.50
Dust Pan 2 45 90.00 60 22.50
Trash Bin 4 66 264.00 176 66.00
Garbage Bag per pack 36 35 1,260.00 840 315.00
Total 3,792.00 2528 948.00
47
Note 9: Other Office Supplies
Quantit Total Cost Total Cost (3
Items y Unit Cost Total Cost (2019) months)
First Aid Kit 1 500 500 500 500
Fire Extinguisher 1 2500 2,500 2,500 250
Total Cost of Other supplies 3,000 3,000 750
and Implements
48
Note 14 : Taxes and Liscense
Particulars
Barangay Business Clearance 250
Initial Tax 1700
Mayor' s Permit 200
Fire Inspection Fee 300
Garbage Fee 300
Sanitary Business Fee 225
Documentary Stamp ( 12 pieces) 180
Business Plate 150
Cedula 5.6
SEC License 2275
BIR License 750
Total Taxes and Licenses 6,336
49
G. Plant Location and Plant Layout
The location of the production will be at # 15 Magsaysay Private Road, Baguio City. The
location is an advantage to the enterprise because it is 10 minutes or less drive away from the
Baguio Town Proper .Transportation and cost of travel is not a problem because there are a lot
P
i
Picture from the Inside
50
Plant Layout
production and convenience of the employee. The storage room and the working area placed
near each other for it the employees need some materials or tools it would be very accessible
or easy to do so. The space of the establishment rented to do the business will undergo few
Plant Layout
51
H. Waste disposal
The waste disposal would be in a daily manner. The segregation of the waste will be
maintained by separating the biodegradable form non- biodegradable. There will be different
trash bins that will be provided or the proper segregation, and it will be kept clean by checking
it daily. The proponents would be mindful and responsible on the scheduled day of the
52
FINANCIAL STUDY
CHAPTER III
FINANCIAL STUDY
The financial study is significant in every project feasibility, considering that this chapter
will reveal how the resources will be provided in order for the business to operate.
This study discloses the start-up capital, income, expenses, investor's income and
investments. Sources of capital are also presented in this chapter with the relative potential
This chapter shows whether the project will be profitable considering its existing direct
and indirect competitors and unstable economic conditions. Numerical figures will also be
presented to show the improvement of the project's financial position over time.
The financial study will present the major parts. These parts include major assumptions,
total project costs, sources of financing the project, financial ratios and financial statements
A. Major Assumptions
The accuracy of financial projection is extremely important for a new business. It would
represent the company’s strategy to gain information whether the project will be profitable in
the future.
1. Purchases
materials by 15% annually to meet the annual increase in production and the cost will
2. Cash
3. Interest income
4. Selling Price
The selling price would be ₱ 200.00. The selling price would increase by 0.5% per
year.
5. Spoilage
The enterprise will consider a constant percentage for spoilage that is 10/264.
6. Depreciation
The furniture and fixtures will be depreciated using the straight line method,
which have an estimated useful life of 10 years. No salvage value will be assumed by
the enterprise.
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7. Advertising Expense
In the first year of operation, the proponents expect to spend Php 750.00 for the
advertising expense. The Php 750.00 is for the flyers. The proponents also used the
8. Partners’ Withdrawals
The partners will be allowed to withdraw 50% of their share in the net income for
9. Utilities Expense
Rent expense is based on a five-year lease contract which cost Php 20,000 per
month.
11. Sales
The enterprise intends to sell the product on a basis that 99 % of the production is
expected to be sold.
The enterprise assumes that all prices of supply are subject to 3.5% increase
The enterprise will be having 3 employees starting form the first day of operation.
56
14. Investment
The partners of the business will be contributing P52,062.45 each for a total of
B. SOURCES OF FINANCING
The primary source of financing for the establishment of Mumshy Mushroom Enterprise
is the capital contribution of the partners. Each partner will give monetary contribution in order
to meet the initial project cost. The capital contribution of each partner are as follows:
57
C. Financial Statements
Equity
Dulce, Capital 74,789.90 116,375.08 171,375.89 242,432.89 332,363.17
Liberato, Capital 74,789.90 116,375.08 171,375.89 242,432.89 332,363.17
Mabalot, Capital 74,789.90 116,375.08 171,375.89 242,432.89 332,363.17
Redondo, Capital 74,789.90 116,375.08 171,375.89 242,432.89 332,363.17
Total Equity 13 299,159.62 465,500.33 685,503.54 969,731.56 1,329,452.70
Total Liabilities and Equity 354,680.78 539,096.76 771,675.40 1,070,779.86 1,447,831.09
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Mumshy Mushroom Enterprise
Statement of Cash Flow
For the Years December 31, 2019-2023
60
Mumshy Mushroom Enterprise
Statement of Changes in Owner's Equity
For the Years December 31, 2019-2023
Liberato Capital,
Beginning 52,062.45 74,789.90 70,663.09 79,332.19 96,511.70
Add: Share in Net income 22,727.46 66,536.28 88,001.28 113,691.21 143,888.46
Liberato Capital 74,789.90 141,326.19 158,664.38 193,023.40 240,400.15
Less: Withdrawal - 70,663.09 79,332.19 96,511.70 120,200.08
Liberato Capital, End 74,789.90 70,663.09 79,332.19 96,511.70 120,200.08
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Mabalot Capital,
Beginning 52,062.45 74,789.90 70,663.09 79,332.19 96,511.70
Add: Share in Net income 22,727.46 66,536.28 88,001.28 113,691.21 143,888.46
Mabalot Capital 74,789.90 141,326.19 158,664.38 193,023.40 240,400.15
Less: Withdrawal - 70,663.09 79,332.19 96,511.70 120,200.08
Mabalot Capital, End 74,789.90 70,663.09 79,332.19 96,511.70 120,200.08
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Notes to Financial Statements
Note 2: Cost of Goods Sold Schedule 2019 2020 2021 2022 2023
Raw Materials 4 8800 15,711.30 18,700.37 22,258.12 26,492.73
Direct Labor 5 164160 254,858.40 263,778.44 273,010.69 282,566.06
Employee Benefit 6 37,936.80 33,335.10 34,249.82 35,196.57 36,176.45
Factory Overhead 7 231023.9964 271,502.21 274,799.84 280,588.72 280,242.89
Manufacturing Cost 441,920.80 575,407.00 591,528.49 611,054.10 625,478.13
Add: Work in Process, beg - 36 41 48 55
Goods placed into process 441,920.80 575,443.00 591,569.89 611,101.71 625,532.88
Less: Work in Process, end 8 36 41 48 55 63
Cost of Goods Manufactured 441,884.80 575,401.60 591,522.28 611,046.96 625,469.91
Add: Finished Goods, beg - 96 111 127 146
Goods Available for Sale 441,884.80 575,497.81 591,632.92 611,174.20 625,616.24
Less: Finished Goods, end 9 96 111 127 146 168
Cost of Goods Sold 441,788.58 575,387.17 591,505.68 611,027.87 625,447.97
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Note 4: Selling Expense Schedule 2019 2020 2021 2022 2023
Advertising Expense 13 750.00 - - - -
Total Selling Expense 750.00 0.00 0.00 0.00 0.00
Note 6: Cash and Cash Equivalents Schedule 2019 2020 2021 2022 2023
Cash on hand (5%) 15115.51 24403.31 36099.09 51120.99 70040.04
Cash in Bank 287,194.63 463,662.81 685,882.69 971,298.84 1,330,760.68
Total Cash and Cash Equivalents CF 302,310.14 488,066.12 721,981.78 1,022,419.84 1,400,800.72
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Note 9: Furnitures and Fixtures Schedule 2019 2020 2021 2022 2023
Racks 3,498.25 3,498.25 3,498.25 3,498.25 3,498.25
Table 8100 8100 8100 8100 8100
Monoblock Chair 1500 1500 1500 1500 1500
Cabinet 500 500 500 500 500
Total 13,598.25 13,598.25 13,598.25 13,598.25 13,598.25
Less: Accumulated Depreciation 19 1,359.83 2,719.65 4,079.48 5,439.30 6,799.13
Equipment 12,238.43 10,878.60 9,518.78 8,158.95 6,799.13
Note 10: Income Tax Payable Schedule 2019 2020 2021 2022 2023
Income Tax IS 38,961.36 142,577.75 188,574.18 243,624.01 308,332.41
Divide by: Quarters in a Year 2.67 4 4 4 4
Income Tax Payable 14,610.51 35,644.44 47,143.55 60,906.00 77,083.10
Note 11: Benefits Payable Schedule 2019 2020 2021 2022 2023
SSS 12,616.80 4,896.90 5,068.29 5,245.68 5,429.28
Philhealth 2400 3600 3600 3600 3600
Pag-ibig 2400 3600 3600 3600 3600
13th month pay 20,520 21,238.20 21,981.54 22,750.89 23,547.17
Total Employee Benefits 7 37,936.80 33,335.10 34,249.82 35,196.57 36,176.45
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Note 13: Total Equity Schedule 2019 2020 2021 2022 2023
Capital, Beginning 208,249.79 299,159.62 465,500.33 685,503.54 969,731.56
Add: Net Income IS 90,909.83 332,681.42 440,006.42 568,456.03 719,442.28
Total 299,159.62 631,841.04 905,506.75 1,253,959.57 1,689,173.84
Less: Withdrawals - 166,340.71 220,003.21 284,228.01 359,721.14
Capital, Ending 299,159.62 465,500.33 685,503.54 969,731.56 1,329,452.70
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Schedule 5: Direct Labor 2019 2020 2021 2022 2023
Daily Salary of Production Worker 285 294.975 305.299125 315.9845944 327.0440552
Multiply by: Production Days 192 288 288 288 288
Salary per worker 54720 84952.8 87926.148 91003.56318 94188.68789
Multiply by: No. of workers 3 3 3 3 3
Yearly Compensation of Worker 164,160.00 254,858.40 263,778.44 273,010.69 282,566.06
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Schedule 8: Work in Process 2019 2020 2021 2022 2023
Weekly Production 100 115 132 152 175
Multiply by 36% 36% 36% 36% 36%
Work in Process, end 36 41 48 55 63
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Schedule 11: Other Office Supplies 2019 2020 2021 2022 2023
First Aid kit 500.00 517.50 535.61 554.36 573.76
Fire Extinguisher 2,500.00 - 2,678.06 - 2,868.81
Total Other Office Supplies 3,000.00 517.50 3,213.68 554.36 3,442.57
Schedule 12: Taxes and Licenses 2019 2020 2021 2022 2023
Barangay Business Clearance 250 250 250 250 250
Initial Tax 1700 - - - -
Mayor' s Permit 200 207 214.25 221.74 229.50
Fire Inspection Fee 300 310.5 321.37 332.62 344.26
Garbage Fee 300 300 300 300 300
Sanitary Business Fee 225 225 225 225 225
Documentary Stamp ( 12 pieces) 180 180 180 180 180
Business Plate 150 - - - -
Cedula 5.60 5.60 5.60 5.60 5.60
SEC License 2,275 - - - -
BIR License 750 - - - -
Total Taxes and Licenses 6,335.60 1,478.10 1,496.21 1,514.96 1,534.36
Schedule 14: Tools and Implements 2019 2020 2021 2022 2023
Small Shovel 690.00 - - 765.02 -
Water Hose 218.99 - - 242.80 -
Water Spray 1,228.00 - - 1,361.51 -
Total 2,136.99 - - 2,369.32 -
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Schedule 15: Production Supplies 2019 2020 2021 2022 2023
Hand Gloves (per box) 1280 1,987.20 2,056.75 2,128.74 2,203.24
Face Mask (per box) 2560 3,974.40 4,113.50 4,257.48 4,406.49
Apron 1200 1,863.00 1,928.21 1,995.69 2,065.54
Hairnet (per piece) 426.67 662.40 685.58 709.58 734.41
Total 5466.67 8,487.00 8,784.05 9,091.49 9,409.69
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Schedule 18: Rent Expense 2019 2020 2021 2022 2023
Monthly Rent 20000 20000 20000 20000 20000
Multiply by: Number of Months 8 12 12 12 12
Total 160,000 240,000 240,000 240,000 240,000
Add: Prepaid Rent( 1 month advance and 1 month deposit) 40,000 - - - -
Rent Expense 200,000 240,000 240,000 240,000 240,000
Schedule 19: Depreciation Expense- Furniture and Fixtures 2019 2020 2021 2022 2023
Racks 3,498.25 3,498.25 3,498.25 3,498.25 3,498.25
Table 8,100 8,100 8,100 8,100 8,100
Monoblock Chair 1,500 1,500 1,500 1,500 1,500
Cabinet 500 500 500 500 500
Total 13,598.25 13,598.25 13,598.25 13,598.25 13,598.25
Divided by: Useful Life- years 10 10 10 10 10
Total Depreciation Expense 1,359.83 1,359.83 1,359.83 1,359.83 1,359.83
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Schedule 22: Renovation Cost 2019
Paint 5,800
Paint Brush 480
Roller 170
Roller Tray 90
Thinner 200
Total 6,740
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D. FINANCIAL RATIOS
The values computed in the previous financial statements, notes, and schedules were
used in the computation of the different financial ratios. The financial ratios are important in
order to find out the possible strengths and weaknesses of the business so as to take actions
In 2019 for instance, the firm has at least Php 6.17 to cover every peso liability incurred.
2. Acid Test Ratio. Measures the firm’s ability to pay its short-term obligation from its most
In 2019 for instance, for every peso of current liability incurred. The firm has Php 5.44 that is
The debt ratio of the firm indicates the percentage of the contribution of the creditors to the
resources of the firm. The debt ratio is decreasing from 16% to 8% from 2019 to 2023, which
means that the company is able to provide its own needs without depending so much on the
outside sources.
As shown above, the equity ratio is increasing from 84% to 92% from 2019 to 2023. It
indicates that new investors and creditors will believe in the company and are willing to
5. Debt to Equity Ratio. Compares the resources provided by creditors with resources
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The ratios show that the firm mostly rely on internal financing rather than external financing
6. Net Profit Margin. Measures whether the company has the ability of maintaining income
A higher net profit margin means that a company is more efficient at converting sales into
actual profit. The net profit margin of the firm has an average of 73.2%, which is a very
favorable condition of the firm. This means that the firm has efficient operation.
7. Return on Partner’s Equity. Measures the amount earned on the partners’ investments.
The return on partners’ equity averages 55.6% although in a decreasing trend after 2020. For
instance, 2019 shows that 30% of the equity portion is earned by the partners.
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8. Return on Assets. Measures how well assets of the firm have been employed by the
management.
In 2019, 37% return on assets was computed which represent how the assets are employed by
the management. However, this increases in the next years which means that the company
9. Payback Period. Length of time before the net investment cost is recovered.
2019 2020
Net Cash Inflow 107,659 352,097
PV of 1 @ 10% 0.909090909 0.8264463
Present Value of Net Cash Inflow 97871.45413 290989.0021
Payback period in years 1 0.24
The payback period for the total investment is 1.24 years. In these years of operation, partners
can recover their investments. Interest used to get the present value factor is 10%.
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SOCIO-ECONOMIC STUDY
Chapter IV
Socio-Economic Study
INTRODUCTION
This chapter of the study will serve as an aid in determining the socio-economic
contributions of the project which will give a significant impact on the society and economic
development of the country. Some of the factors are Customer, Employment and Income,
A business normally exists to gain income. But, it should also consider the effects of its
operations mainly with the social and economic environment that it covers. As a responsible
entity, Mumshy Mushroom, is after the development of the lifestyle of the society and create a
A. Customer
business. Since the customers are the ones who create demand and pay for supply, they
are known as the end goal of every business. Customers are the main sectors that will
contribute every increase of profit in the business. The enterprise will provide the
customers quality products to make them happy and satisfied. Satisfied customers will
establishing the proposed business comes also the creation of jobs and job
opportunities for unemployed individuals, thus addressing the problem rampant in our
society however small it may be. Simply, as an effect from setting up the business, the
agency provides workers with employment. It will also give some the opportunity to
have another source of income. By this way, the society and the economy would be
benefited.
C. Government
Tax, under the lifeblood doctrine, is the lifeblood of the government. The
proposed business’ creation as a partnership entails paying corporate income tax. The
the law-making body of State to raise revenue for public purpose. Declaring the right
amount of income and paying the right amount of tax would help in the funding of
and the limited local knowledge about its culture. This business project is not only
income generating but will provide food supplement to the people as one of the
programs of the government to attain food sufficiency. Mumshy Mushroom will strictly
implement proper waste disposal; proper segregation of waste from biodegradable and
non-biodegradable will be practiced and will comply with the existing laws in protecting
the environment. Regular cleaning schedule will be imposed to maintain cleanliness and
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Social and Economic Factors
Family
Local
Taxes Government
Government
Implementation of
Government Projects for the
public
MUMSHY National
MUSHROOM Government
STUDY
CHAPTER V
INTRODUCTION
implementation plan is discussed in the organization and management study. This aspect
includes a study of the officers and key personnel, basic consideration in forming the
organization, form of ownership, organizational chart and project schedule. The objective of the
organizational setup and the qualification of the individual who will make up the organization.
A. Basic Consideration
One of the main reasons of the existence of Mumshy Mushroom is to generate profit.
However, it aims to provide a healthy and nutritious food to every Filipino table. Furthermore,
one of the goals of the business is to guarantee a positive impact to its owners, to its customers
B. Form of Ownership
quality service in its field. As stated in Article 1767 of the Civil Code, “by the contract of
partnership, two or more persons bind themselves together to a contribute money, property or
industry to a common fund with the intention of dividing the profits among themselves.”
1. Contributions are made in the form of money, each partner investing Php 52,062.45 to
2. Profits and losses at the end of each period are divided equally among partners.
corporation.
business.
abilities.
The business will comply with all the requirements under the Partnership code of the
Philippines and shall commence operations from the date of issuance of certification by the
C. Organizational Chart
83
Roles and Responsibilities
Worker/Cleaner
Worker
Worker
General Partner
the partnership.
The job qualification for this position will no longer be discussed since one of the
qualified partners will act as the general partner for the company.
84
Purchasing Manager
Responsible for purchasing all the raw materials needed by the business
The job qualification for this position will no longer be discussed since one of the
qualified partners will act as the general partner for the company.
Store Manager
Ensures that the store is kept clean and well ventilated at all times
The job qualification for this position will no longer be discussed since one of the
qualified partners will act as the general partner for the company.
Accountant
Is responsible for all accurate financial records carried out by the business
Carry out end of month reconciliation between the cash book and bank statement
The job qualification for this position will no longer be discussed since one of the
qualified partners will act as the general partner for the company.
Cashier
85
Ensures availability of cash for running operations and ensures that proper records
are kept
The job qualification for this position will no longer be discussed since one of the
qualified partners will act as the general partner for the company.
Cleaner/Worker
Ensure the farm and the entire premises are kept clean at all times
Ensures that the restroom for customers and employees are kept neat at all times
Job qualifications:
a) Male or female
D. Employment Policies
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Employment Benefits
The employees will be employed as permanent workers with SSS, Philhealth and
Pag-Ibig Benefits.
In case of absences due to sickness employees concerned could avail of sick leave
with pay provided that they present supporting documents such as medical
certificates.
Such overtime will be compensated equivalent to 25% of his/her regular wage which
education and experience. They must be suited to the position they are applying for based
Medical certificate
Certificate of Good Moral Character from last School attended (If Necessary)
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Recruitment Process
Interview
Assessment of Requirements
and Interview Results
All employees must abide by the rules and regulations of the partnership. These are the
The official business hour shall be from 8:00AM-5:00AM. All employees must be
at their designated posts within this time. Each employee is required to fill up a log
book as well as a Daily Time Record (DTR) to keep track of their arrival and
departure. And no employees can dismiss themselves unless they have a valid
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2. Absences
The proposed business will adopt the “No work, No pay” policy. All absences,
3. Tardiness
Tardiness would not be tolerated by the entity. Pay for the time missed would be
The employees are each given one-hour breaks which can be used at any time
during operating hours. However, no more than two employees could make use of
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F. Project Schedule
The feasibility is done to determine if the product is feasible and if the project is profitable. The
Each of the partners will contribute equally. The sources of funds to be contributed may
This is alloted for the prepartion of the necessary papaers and documents needed
before applying for business permits and licences. Necessary permits (i.e. business permit,
sanitary permit and other necessary documents) should be processed and filed to the proper
4. Renovation (July-August)
The space where the business will conduct its operations should be renovated in line
This includes the acquisition of equipment, supplies and other necessary materials for
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6. Selection, Hiring and Training of Employees (September-October)
This includes the elimination, selection, interview and orientation of the qualified applicants.
Qualified applicants will be given orientation about the said Mushroom production. This will
make the employees to be fully equipped when the business starts its operations.
This includes distribution of flyers and being advertised on Local radios. This way, the
target market will be informed of the new attraction and entertainment in the city.
Mumshy Mushroom will start its operation on the month of January 2019 after
2018 2019
Activities
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
1. Preparation of the
Feasibility Study
2. Procurement of Funds
3. Processing of
Necessary Papers
4. Renovations
5. Acquisition of Tools,
Implements and
Supplies Needed for
Operation
6. Hiring of Employees
7. Advertisement
8. Opening of the
Business
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ACCOUNTING
INFORMATION SYSTEM
92
ACCOUNTING INFORMATION SYSTEM
methods, procedures and controls established to gather, record, classify, analyze, summarize,
interpret and present accurate and timely financial data for management decisions. An
accounting system allows a business to keep track of all types of financial transactions,
including expenses, income, liabilities, assets, etc., and is capable of generating comprehensive
statistical reports that provide management or other interested parties to aid in the decision-
making process.
The recording phase starts with the understanding of the documentation, specifically all
financial records and paper works, showing what business activities had occurred. A business
document, also known as source document is the original record containing the details to
substantiate a transaction. It provides a means of verifying the accounting records and thus has
an essential part of the information and control system. One example is the source documents
which shoes the original records containing the details to substantiate a transaction.
order, their quantity, and the timeframe. This shall be furnished by the Production
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b. Purchase Order
indicating types, quantities, and agreed prices for products or services. It is used to
control the purchasing of products and services from external suppliers. This is prepared
in three copies, one copy is sent to the vendor, another to the accountant and the last
copy shall be kept in the General Manager’s files together with the Purchase Requisition
c. Receiving Report
It documents what is owed to the supplier in terms of payment for the goods
received or the return of the goods, in some cases. This shall be prepared in three copies
which shall be given each to the Production Manager, Accountant, and General
Manager.
d. Production Order
This document shall contain how many units of output are needed to be
produced. This shall be furnished by the Production and Operation Manager in two
copies.
e. Production Report
f. Summary of Sales
This document shall contain the details of the sale throughout the month.
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g. Summary of Daily Collections
This document shall contain the total remittances from the day’s operations.
This document shall be prepared by the Cashier after depositing all for the
i. Time Card
This document shows the time each employee has reported to work and the
This Document shall contain the over-all time record of each individual employee
The business will maintain various journals to meet specific needs of the business. A
journal entry is made for each transaction showing the accounts and amounts. There are two
kinds of a journal, a special journal and a general journal. A special journal is used to record
particular frequently recurring transactions such as sales, cash receipts, purchases on account,
and cash disbursement while general journal is used to record all transactions for which in a
special journal is not maintained. On the other hand, a ledger is a collection of accounts
maintained by the business. The information provided on the financial statements and the
different account ledgers maintained separately. General ledgers contain all accounts
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appearing on the financial statements. Subsidiary ledgers encompass detailed support for a
These are devices and/or equipment used to maintain the recording, processing and
storage of important business transactions and forms. These develop the internal control
system of the organization. The business should always consider the cost of acquiring,
Chart of accounts is a listing of the accounts available in the accounting system in which
to record entries. It consists of balance sheet accounts (assets, liabilities, capital) and income
statement accounts (revenues, expenses, gains, losses). It is used to organize the finances of
the proposed agency and to segregate expenditures, revenues, assets, and liabilities in an
orderly manner to give the proponents a better comprehension of the financial health the
entity.
The accounts are divided into the following categories: Assets, Liabilities, Capital,
96
Number Account
Asset
Current Asset
109 Purchases
Non-Current Asset
97
Liabilities
Current Liabilities
Partner's Equity
Capital Accounts
98
Income
701 Purchases
99
DESCRIPTION OF ACCOUNTS
ASSETS
Cash on Hand – This includes money from cash sales, there is additional cash
investment from partners, others such as adjustment and corrections in the cash
DEBIT: When cash is collected from the cash sales, there is additional cash Investment
from partners, others such as adjustment and corrections in the cash account at year
end.
CREDIT: When withdrawals are made for the purpose of acquiring assets, supplies,
Raw Materials – These are solely raw materials of the company which are
DEBIT: If inventory count at the end of the accounting cycle is greater than the
CREDIT: If the inventory count at the end of the accounting period is lesser than the
Indirect Materials – These are indirect materials of the company which are
DEBIT: If inventory count at the end of the accounting cycle is greater than the inventory
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CREDIT: If the inventory count at the end of the accounting period is lesser than the
Finished Goods – This is the goods on hand of the partnership at the end of the
Production Tools and Supplies; and Office Supplies – These are supplies unused
as of the balance sheet date. Included are filled supplies used in the maintenance and
operation of the production area and office supplies such as business forms and other
DEBIT: When the company acquires title on the supplies purchased to record Increase in
CREDIT: To record decrease in the amount of supplies at the end of the accounting
period.
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Office Furniture and Fixtures – includes tables, chairs and file cabinets used in
company office
of the noncurrent asset up to the present. It is used to reflect the true value of the
assets as of the balance sheet date due to wear and tear of the asset (Normal balance:
Credit)
LIABILITIES
suppliers.
102
DEBIT: When payment is made.
CREDIT: When paychecks are not yet released and when employees did not yet claim
their salaries.
CREDIT: When payroll is computed and SSS contributions are not yet paid.
CREDIT: When payroll is computed and PhilHealth contributions are not yet remitted.
CREDIT: When payroll is computed and Pag-IBIG contributions are not yet remitted.
103
DEBIT: When payment is made.
CREDIT: When tax due for the year is computed but is yet to be paid.
PARTNER’S EQUITY
business
DEBIT: When losses are distributed; permanent withdrawal from the partnership.
CREDIT: When initial/additional investment are made; when profits are distributed.
Partners’ Drawings – Represents cash or other assets taken by the partner for
personal use
DEBIT: Personal withdrawal of cash or other asset, partner’s personal debt paid by the
CREDIT: Share in the net income including salaries, interest and bonus; debts of the firm
paid by the partner; and partner’s personal receivable collected and retained by the
partnership.
INCOME
104
EXPENSES
CREDIT: When adjusting the amount recorded due to errors and when there are
purchase returns.
Production Tools and Supplies; and Office Supplies – This account is used to
record supplies and tools used in the production and administrative purposes which are
already used
Advertising Expense – Represents the amount paid for the promotion of the
105
DEBIT: When incurred.
fund
106
DEBIT: When incurred.
Taxes and Licenses – Refers to the business taxes (other than income tax),
107
Organization Cost – Refers to the cost incurred in forming or organizing the
partnership
Income Summary – A temporary account used to close the revenue and expense
account
DEBIT: To close the revenue account; to close the income summary account to net
income.
V. INTERNAL CONTROL
covers all the policies and procedures adopted by management. A suitable control system is
necessary to help in achieving the management’s objective and ensuring the orderly and
efficient conduct of the management policies, safeguarding of assets, prevention and detection
of fraud and error, accuracy and completeness of accounting records, and the timely
of accounting records to control cash receipts and disbursements and eliminate errors. The
108
selection and training of employees must be thoroughly, and their duties, responsibilities, and
related to:
PAYROLL
o The managers shall be responsible for the approval of the time cards of the
109
o Three copies of the payroll shall be prepared by the Accountant. One for the
cashier for disbursement purposes, the other for the manager, and the
o In the distribution of checks, the cashier shall make sure that every employee
o Employees record their time but must not record other employee’s time.
o Time cards of each employee should be approved and signed by their manager
PAYABLES
o Policies and procedures regarding payments within the discount period shall be
instituted.
110
PURCHASES
authorization.
o The General Manager should perform an actual inspection of the available and
o The General Manager prepares three copies of Purchase Orders which are pre-
numbered. One copy remains with the General Manager for verification
purposes with the Receiving Report. The other copy is sent to the vendor, and
Item to be acquired
Price
Quantity
Supplier
receiving Report, the invoice and the purchase order match. The two copies shall
remain in his records. The first copy shall be filed according to date together with
the other purchase vouchers that are not yet paid. The other copy is intended for
safekeeping purposes.
111
o Upon delivery of goods, a blank receipt which is pre-numbered shall be issued to
the production manager. He is responsible for the inspection and physical count
of the goods
o If they are in conformity with the Purchase Order. After that, he shall prepare
three copies of Receiving Report. One copy of it shall be filed alphabetically. The
other shall be forwarded to the General Manager for verification purposes. The
o When the receiving report doesn’t match the purchase order; a recount shall be
done to be conducted by the Production Manager, The General Manager and the
INVENTORIES-FINISHED GOODS
o Inventory should be verified regularly for correctness in quantity and quality and
o Inventory should be stored and locked in safely in order to prevent theft and
losses
112
DELIVERY OF FINISHED GOODS
o Delivery should only be done after all pertinent documents are present. The
Production and Operation Manager should check that such documents are valid
and correct before transferring the goods under the care of the delivery man.
o The salesperson must be asked to sign the receiving reports which would
evidence the delivery and receipt of such goods. Such report must be pre-
The financial reports that are prepared in accordance with the Generally Accepted
Accounting Principles (GAAP) and techniques are reported to others that are useful in making
economic decisions. These include the Statement of Financial Position, Income Statement,
Statement of Cash Flow, and the Statement of Changes in Partners’ Equity. These reports are
accompanied by supporting schedules and supplementary notes that show important details
and other information that cannot be conveniently included in the body of the financial
statements.
The management reporting system for Mumshy Mushroom has been designed to
generate reports that will provide management and the supervising agency with useful and
timely information for more effective planning, coordination and control of operations. The
113
management reporting system covers the entire range of the existing operations of the
enterprise, thus providing both financial and operating data necessary for effective planning
and control.
continued effectiveness as a channel for the effective planning, monitoring and control of
operations.
The reports used in the management reporting system are the following:
The Statement of Financial Performance, also known as the Income statement, shows
the level of activity of the business. This is used to study cyclical sales patterns, such as when
sales peak each year. Managers also establish their advertising and inventory budgets with
these reports.
Mumshy Mushroom
Projected Income Statement
For the Year Ending December 31, 2018-2023
Net Sales xx
Less: Cost of Goods Sold xx
Gross Profit xx
Less: Operating Expenses xx
Administrative Expense xx
Selling Expense xx
Earnings Before Tax xx
Less: Income Tax (30%) xx
Net Income After Tax xx
114
Statement of Changes in Owner’s Equity
The statement of owner’s equity is a financial statement that reports the changes in the
equity section of the balance sheet during an accounting period. In other words, it reports the
events that increased or decreased stockholder’s equity over the course of the accounting
period.
Mumshy Mushroom
Projected Changes In Owner’s Equity
As of December 31, 20XX
Beginning Capital xx
Add: Net Income xx
Total xx
Less: Drawings xx
Total Partner's Equity xx
115
Redondo, Capital xx
Add: Share in Net income xx
Redondo, Capital xx
Less: Withdrawal xx
Redondo Capital, End xx
The Statement of Financial Position shows the financial condition of the business as of
the year end compared with the previous year. It shows the assets that the partnership owned.
In contrast, the liabilities which are the cumulative indebtedness of the business incurred. And
the Partners’ Capital embodies the value which the partners owned after selling their assets.
Mumshy Mushroom
Financial Statement
As of December 31, 20XX
Assets
Current Assets
Cash and Cash Equivalents xx
Prepaid Rent xx
Total Current Assets xx
116
Liabilities and Equity
Liabilities
Income Tax Payable xx
Employee Benefits Payable xx
Utilities Payable xx
Total Liabilities xx
Equity
Dulce, Capital xx
Liberato, Capital xx
Mabalot, Capital xx
Redondo, Capital xx
Total Equity xx
Total Liabilities and Equity xx
The Statement of Cash Flow reflects the company's sources and uses of its funds over a
specified time period. Thus, the partners will know where their money goes.
Mumshy Mushroom
Statement of Cash Flows
For the Years Ended December 31, 2018-2023
117
Cash flow from investing activities:
Furnitures and Fixtures xx
xx
Net cash used in investing activities xx
118
VII. BUSINESS CYLES AND FLOWCHARTS
The revenue cycle starts from the arrival of the customer. They will choose the product
that they want and then the cashier will input the chosen product in the system. Then the
system will automatically compute the total bill of the customer. And after, payment of the
products availed the system would furnish receipt. Payment is mandatorily made, and the
a. Official Receipt
b. Deposit slip
respective bank.
This form summarizes cash receipts across various accounts for a given day. It
will help the company monitored from how many cash is coming. It is used together
with the Cash Disbursement Journal, which tracks cash going out of the business.
2. Purchasing
All the employees are required to check the inventory if there are enough supplies
available. They are encouraged to inform the manager as soon as possible. If approved and
verified, the employee then prepares a purchase request which would be signed by the
employee himself and the manager. The employee will prepare a purchase order in three
copies: one for the supplier, one for the manager, and one for filing by the employee.
When the purchased supplies had arrived, the employee then checks if the supplies are
correct and in good condition. Upon checking, the employee will make a receiving report
stating the items received. This will be in two copies, one for the manager and another for filing
by the employee. The manager will compare the receiving report, the purchase order and the
a. Requisition Slip
It is used internally to formally order supplies, equipment and tools. This is used
when materials or supplies are needed or when reach the reorder point.
b. Purchase Order
This is issued to suppliers stating the specifications, and quantities for the
c. Purchase Journal
d. Receiving Report
It is a record showing all purchases as they are delivered, in order that better
control may be secured over the purchasing function. It is done by the receiving staff
e. Inventory Logbook
120
3. Payroll Cycle Forms
It is a requirement for the employees to maintain Daily Time Records (DTR) to monitor
their hours worked in a day. DTR are duly signed by the employee, and the manager will
summarize it every end of the month. The manager has the right to adjust the salary rates and
The manager will then inspect the employees’ daily time cards, including their rate of
salary, bonuses and deductions, and performance at work. She also prepares a report on the
employees’ bonuses based on performance, and the updated salary rates. A copy of the
With the updated salary rates together with the time card, the manager then prepares a
duplicate payroll register, one for the manager himself, and the other is for filing by the
employee.
The manager makes and signs the checks for the payment of services rendered by the
employees together with bonuses as an additional compensation. Deductions include SSS, PAG-
IBIG and PhilHealth contributions, and withholding taxes as well. The manager will prepare the
This shows the time an employee reports for work and goes out and is used in
payroll preparation.
b. Payroll Register
121
Information includes employee’s name, regular hours, sick hours, overtime hours,
income tax withheld, medical insurance deductions, union dues, gross pay, and net pay.
This shows the periodic and accumulated earnings of each employee aside from
This itemizes the deductions from each employee’s earnings to derive net pay.
f. Application Forms
employment worthiness.
g. Pay Slip
less deductions.
h. Pay Envelope
122
4. Sales Cycle
As the enterprise receives an order from customer, sales order arises immediately and
then inventory must have to update. Then the entity issue three copies of official receipt, one
copy will be given to the customer, the other is to the accountant, and the other will be for
This is given to the customers to serve as a record of goods sold to them. Copies are
retained by the store as a record of sales. It specifies how much is due from or how
123
FLOWCHARTS
Revenue Cycle
Customer
Compare
Prepare Bank Deposit Slip
General Ledger
124
Purchase Cycle
Purchase Orders
Purchase Request Receiving Report
Compare if correct
Supplier Purchasing
Purchasing Manager Prepare Voucher
Purchasing
Manager
Manager
File
File File
Payroll Cycle
Payroll register
Time Cards
Time Card
Time record
Salary Rates
Performance
Report
Employee Checks
Payroll Summary
Checked and Updated
Employee file
General
Manager
Accountant
File
Sale Cycle
Cashier
File
127
APPENDICES
128
School of Accountancy and Business Management 1. Do you buy mushrooms?
Saint Louis University
Maryheights Campus __ Yes __ No
Baguio City 2600
(If NO, proceed to number 5.)
129
School of Accountancy and Business Management
Saint Louis University
Maryheights Campus
Baguio City 2600
Dear respondents,
Name of enterprise:
We, the undersigned fourth year
Management Accounting students of ___________________
the School of Accountancy and Business
Management of Saint Louis University, Address:
are conducting a feasibility study on our
project proposal which is MUSHROOM ____________________________
PRODUCTION.
130
Arithmetic Straight Line
Historical Values
Year a Yi - 1 Yc Y - Yc (Y - Yc)²
2013 21,048
2014 23,995 3,625 21,048 24,674 -679 460,502
2015 27,355 3,625 24,674 28,299 -945 892,376
2016 31,184 3,625 28,299 31,925 -740 548,197
2017 35,550 3,625 31,925 35,550 - -
Total 1,352,878
STD DEV 520
131
Arithmetic Geometric Curve
Historical Values
Year % Increase (Decrease) Yi+1 1+r Yc Y-Yc (Y-Yc)^2
2013 21,048 33499.55899 1.02 32842.7049 -11,794 139,104,357.47
2014 23,995 14 34169.55017 1.02 33499.55899 -9,504 90,332,128.93
2015 27,355 14 34852.94118 1.02 34169.55017 -6,815 46,443,946.07
2016 31,184 14 35,550 1.02 34852.94118 -3,669 13,459,584.58
2017 35,550 14
Total 289,340,017.06
STD DEV 7,607.10
132
Statistical Straight Line
Historical Values
Year X X² XY a b (x) Yc Y - Yc (Y - Yc)²
2013 21,048 1 1 21,048 16,968.87 3,619.21 -1 20,588.08 460.37 211,942.80
2014 23,995 2 4 47,990 16,968.87 3,619.21 -2 24,207.29 -212.05 44,965.43
2015 27,355 3 9 82,064 16,968.87 3,619.21 -3 27,826.49 -471.92 222,712.12
2016 31,184 4 16 124,737 16,968.87 3,619.21 -4 31,445.70 -261.49 68,377.28
2017 35,550 5 25 177,750 16,968.87 3,619.21 -5 35,064.91 485.09 235,314.67
Total 139,132 15 55 453,589 783,312.30
STD DEV 395.81
133
Articles of Partnership
KNOW ALL MEN BY THESE PRESENTS: That we, Ezekiel Reyes(single), Patricia Llin Dulce (single),
Vanessa Lou Mabalot (single), Joyz Rianne Liberato (single), and Daisilyn Redondo(single) all
Filipinos, of legal ages, and residents of the Philippines, have on this day, covenanted to
establish a partnership, in accordance with the laws of the Republic of the Philippines;
1. That the names and addresses of the respective partners are as follows:
Name Address
2. That the name of this partnership shall be Mumshy Mushroom and it shall exist for thirty (30)
years from the execution of this instrument, unless the partners mutually agree in writing to a
shorter period. Should the partnership be terminated by unanimous vote, the asset and ash of
the partnership shall be used to pay all creditors, with the remaining amounts to be distributed
3. That the capital of this partnership shall be 350,000.00 Philippine currency, broken down in
contributions, as follows:
134
Name Amount
The partnership shall maintain a capital account record for each partner; should any
partner’s capital account fall below the agreed to amount, then that partner shall (1) have his
share of partnerships profits the due and payable applied instead to his capital account; and (2)
pay any deficiency and payable or, if it is, his share is insufficient to cancel the deficiency.
That the purpose(s) for which this partnership is established is/are as follows:
To generate income
4. The partners shall provide their service and best efforts on behalf of the partnership. No
partners shall receive a salary for service rendered to the partnership. Each partner shall have
equal rights to manage and control the partnership and its business. Should there be
differences between the partners concerning ordinary business matters, a decision shall be
made by unanimous vote. It is understood that the partner may elect one of the partners to
conduct the day-to-day business of the partnership; however, no partner shall be able to bind
the partnership by act or contract to any liability exceeding Seventy Thousand Pesos Pesos (Php
70,000.00), Philippine currency, without the prior written consent of each partner.
135
5. That the profits and losses shall be divided among the partners pro rata in relation to their
respective contribution.
6. In the event a partner withdraws or retires from the partnership for any reason, including the
death, the remaining partner may continue to operate the business using the same name. A
withdrawing partner shall be obliged to give seven (7) days’ prior written notice of his/her
intention to withdraw or retire and shall be obliged to sell his/her interest in the partnership.
7. No partner shall transfer in the partnership to any other party without consent of the
remaining partner(s). The remaining partner(s) shall pay the withdrawing or retiring partner, or
to the legal representative of the deceased or disabled partner, the value of his interest in the
partnership, or (a) the sum of his capital account, (b) any unpaid loans due him, (c) his
proportionate share of accrued net profits remaining undistributed in his capital account, and
(d) his interest in any prior agreed appreciation in the value of the partnership property over its
book value. No value for goodwill shall be included in determining the value of the partner’s
interest.
8. A partner who retires or withdraws from the partnership shall not directly or indirectly
engage in a business which is or which be competitive with the existing or then anticipated
business of the partnership for the period thirty (30) years within the City of Baguio where the
IN WITNESS WHEREOF, we have hereunto set our hands this <INSERT DATE SIGNED> at Baguio
136
REPUBLIC OF THE PHILIPPINES
City of Baguio
ACKNOWLEDGEMENT
BEFORE ME, a Notary Public for and in the City of Baguio, personally appeared the following
Daisilyn Redondo
All known to me and known to be the same persons who executed the foregoing instrument
which they acknowledge to me to be their free and voluntary act deed, consisting of only _____
page(s), including this page in which this acknowledge is written, duly signed by them and their
WITNESS MY HAND AND SEAL this <INSERT DATE> at City of Baguio, Philippines.
NOTARY PUBLIC
137
138
139
Minimum Wage
140
FIRE SAFETY INSPECTION CERTIFICATE 2018
Mumshy Mushroom
Daisilyn Redondo, et al No. 15 Magsaysay Private Road,
Baguio City Baguio City
Street
141
Mumshy Mushroom
142
143
144
145
146
147
148
149
SOCIAL SECURITY EC Total Contribution Total
ER EE TOTAL ER ER EE Total Contribution
73.70 36.30 110.00 10.00 83.70 36.30 120.00 110.00
110.50 54.50 165.00 10.00 120.50 54.50 175.00 165.00
147.30 72.70 220.00 10.00 157.30 72.70 230.00 220.00
184.20 90.80 275.00 10.00 194.20 90.80 285.00 275.00
221.00 109.00 330.00 10.00 231.00 109.00 340.00 330.00
257.80 127.20 385.00 10.00 267.80 127.20 395.00 385.00
294.70 145.30 440.00 10.00 304.70 145.30 450.00 440.00
331.50 163.50 495.00 10.00 341.50 163.50 505.00 495.00
368.30 181.70 550.00 10.00 378.30 181.70 560.00 550.00
405.20 199.80 605.00 10.00 415.20 199.80 615.00 605.00
442.00 218.00 660.00 10.00 452.00 218.00 670.00 660.00
478.80 236.20 715.00 10.00 488.80 236.20 725.00 715.00
515.70 254.30 770.00 10.00 525.70 254.30 780.00 770.00
552.50 272.50 825.00 10.00 562.50 272.50 835.00 825.00
589.30 290.70 880.00 10.00 599.30 290.70 890.00 880.00
626.20 308.80 935.00 10.00 636.20 308.80 945.00 935.00
663.00 327.00 990.00 10.00 673.00 327.00 1,000.00 990.00
699.80 345.20 1,045.00 10.00 709.80 345.20 1,055.00 1,045.00
736.70 363.30 1,100.00 10.00 746.70 363.30 1,110.00 1,100.00
773.50 381.50 1,155.00 10.00 783.50 381.50 1,165.00 1,155.00
810.30 399.70 1,210.00 10.00 820.30 399.70 1,220.00 1,210.00
847.20 417.80 1,265.00 10.00 857.20 417.80 1,275.00 1,265.00
884.00 436.00 1,320.00 10.00 894.00 436.00 1,330.00 1,320.00
920.80 454.20 1,375.00 10.00 930.80 454.20 1,385.00 1,375.00
957.70 472.30 1,430.00 10.00 967.70 472.30 1,440.00 1,430.00
994.50 490.50 1,485.00 10.00 1,004.50 490.50 1,495.00 1,485.00
1,031.30 508.70 1,540.00 10.00 1,041.30 508.70 1,550.00 1,540.00
1,068.20 526.80 1,595.00 10.00 1,078.20 526.80 1,605.00 1,595.00
1,105.00 545.00 1,650.00 30.00 1,135.00 545.00 1,680.00 1,650.00
1,141.80 563.20 1,705.00 30.00 1,171.80 563.20 1,735.00 1,705.00
1,178.70 581.30 1,760.00 30.00 1,208.70 581.30 1,790.00 1,760.00
150
Pag-ibig Contribution Table
MS Rate
Monthly Compensation
Employee Employer (if any)
P1,500.00 and below 1.00% 2.00%
151
22,000.00 to
15 22,999.99 22000 550 275 275
23,000.00 to
16 23,999.99 23000 575 287.5 287.5
24,000.00 to
17 24,999.99 24000 600 300 300
25,000.00 to
18 25,999.99 25000 625 312.5 312.5
26,000.00 to
19 26,999.99 26000 650 325 325
27,000.00 to
20 27,999.99 27000 675 337.5 337.5
28,000.00 to
21 28,999.99 28000 700 350 350
29,000.00 to
22 29,999.99 29000 725 362.5 362.5
30,000.00 To
23 30,999.99 30000 750 375 375
31,000.00 to
24 31,999.99 31000 775 381.5 381.5
32,000.00 to
25 32,999.99 32000 800 400 400
33,000.00 to
26 33,999.99 33000 825 412.5 412.5
34,000.00 to
27 34,999.99 34000 850 425 425
28 35,000.00 and up 35000 875 437.5 437.5
152