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Business Requirements (Management and Organization Study) Material Cost
Business Requirements (Management and Organization Study) Material Cost
Business Requirements (Management and Organization Study) Material Cost
Material Cost:
The company estimated the amount of php400,000 of costs was incurred when the raw material
was purchased and, that costs eventually became a cost of goods sold at the end of the process when the
goods were delivered to the customer. Also, the packing and container charges paid it cost the amount of
php 20,000. and the freight inward paid it cost the amount of php23,000
Other Cost:
I. Rent & Utilities
Rent and utilities costs the amount of php40,0000. Projected to rise slightly due to
inflationary increases.
II. Transportation
Delivery of the products is quite costly, the required costs estimated the amount of
php450,000 every year. the delivery takes a few days to reach its destination, even if you keep it
inside the country while to other countries it takes a few months. The Topper warehouse main
delivery options can be inter-modal or multi-modal such as truck or van delivery, Railways, Inland
waterways (barges) and Pipelines. Costs of transportation include the costs of the vehicles, costs
of fuel, wages for those controlling the vehicle, etc. The cost of this any service depends on the
weight, bulk, the distance that the product has to travel in order to reach the specific location and
the time that it takes to get there.
It also includes the Freight-in and shipping costs . The delivering a certain amount of goods
to the customer that require cooled vans in order to keep the goods in a certain condition during
the delivery. These delivers are often regular and follow a specific delivery schedule. The cost for
this delivery is quite high because of personalization, potential of spoilage and the speed and the
mode of the delivery.
X. Office Equipment
The company purchases office equipment, As the supplies on hand are normally
consumable within one year they are recorded as a current asset of our balance sheet. These are
the copiers, fax machines, computers, and printers.
XI. Furniture and Fixtures
To furnish the company’s office, topper warehouse provides furniture and fixtures these
are the bookcases, chairs, desks, filing cabinets, and tables. The total cost of these assets is
estimated at php400,000. The assets are depreciated using the straight-line method, typically for a
period of 10 years, and are all classified as long-term assets on the company’s balance sheet.
Depreciation
Property and equipment are recorded at cost less accumulated depreciation. Buildings are
depreciated on a straight-line basis over the expected useful life of the asset, which is individually
assessed, and estimated to be up to 20 years. Leasehold improvements are depreciated on a straight-line
basis over the lesser of the length of the lease and the estimated useful life of the assets, up to a
maximum of five years. All other property and equipment are depreciated using the declining balance
method as follows:
Changes in circumstances, such as technological advances, can result in differences between the
actual and estimated useful lives. In those cases where we determine that the useful life of a long-lived
asset should be shortened, we increase depreciation expense over the remaining useful life to depreciate
the asset's net book value to its estimated salvage value
Investment Requirements
As a start-up business, the company has little equity and so must rely on debt financing to begin
the business. Fortunately, the interest payments made on debt capital are tax deductible. Overall, though,
the team would prefer equity loans, where overall interest rates are naturally lower (equity reduces risk of
lender). As the business builds equity (moving into its own building, building an inventory, gaining
equipment) the loans it depends on will begin to increasingly depend on equity.
our team would like to make an initial request to the bank for php800,000.00 in capital for a
vehicle, several computers, lab equipment, and other start-up costs for the business. After six months, the
business would request an additional php200,000.00 for further operating expenses
For complete details on how the funds will be used, the most important needs that will be
addressed by these funds will be vehicle costs, computers, lab equipment, and related start-up costs.
The company would like to purchase one vehicle for the first nine months of operation. After this point,
the company will re-evaluate the need for further vehicle expenditures. Throughout the business’ life,
salesmen and engineers will be traveling to warehouses throughout the state and country serving
clients.
Computers and lab equipment will be needed for technical research and development of the
product, one of the priorities of the company in its first few months of operation. Initially this
equipment will be used at the business owner’s homes, and then moved to a dedicated facility as the
company’s situation improves.
Funds provided by the loan will also be used for the salaries of the engineers working at the
company in the first year. These salaries are very modest for current job market conditions.
Repayment on the principle of the loan will begin at the beginning of the company’s second year
of business. For the first six months, the payments will be php50,000.00 per month, and following that,
php80,000.00 per month. The duration of the php80,000.00 payments will depend on the interest rate
of the loan.
Interest on the loan will be paid throughout the first few years of the business.