LIGHT TOUCH WOOD CRAFTS

An Undergraduate Feasibility Study

Presented to the Faculty of the College in

Business Education

Cheena S. Liloc

Iris Claire D. Nacasabog

May 2022
 Light Touch Wood Crafts

______________________

An Undergraduate Feasibility Study

Presented to the Faculty of College of

Business Education

______________________

In Partial Fulfillment

of the Requirements of the Course

Feasibility Study for

the Degree of Bachelor of Science in Business Administration

______________________

Cheena S. Liloc

Iris Claire D. Nacasabog

May 2022
 ii

APPROVAL SHEET

Upon the recommendation of the Panel of Examiners, the Feasibility Study entitled:

“LIGHT TOUCH WOOD CRAFTS”, prepared and submitted by Cheena S. Liloc and

Iris Claire D. Nacasabog in partial fulfillment of the requirements of the course

Feasibility Study for the degree of Bachelor of Science in Business Administration, has

been examined and is recommended for approval and acceptance.

RALPH CONRAD H. PANTI, CPA, MBA

Adviser

PANEL OF EXAMINERS

Approved by the Panel of Examiners with a grade of Passed.

DR. MELCHOR Q. BOMBEO, CPA, FRIEDr

Chairperson

RUBYLENE MASINADIONG, MBA SUSAN S. CRUZ, PhD, DBA

Member Member

Accepted in partial fulfillment of the requirements of the course Feasibility Study for the

degree of Bachelor of Science in Business Administration.

DR. MELCHOR Q. BOMBEO, CPA, FRIEDr

Dean, College of Business Education

May 2022
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ACKNOWLEDGMENT

The researchers would like to acknowledge the following individuals who have

been part of the success of this research study.

The Panelist headed by the Chairman, Dr. Melchor Q. Bombeo, and the

members, Dr. Susan S. Cruz, and Ms. Rubylene R. Masinadiong in providing

constructive criticism to improve the feasibility study’s results, as well as making

suggestions and recommendations.

Mr. Ralph Conrad H. Panti, CPA, MBA, the feasibility adviser of this study,

for giving instructions, comments, and suggestions and for making this study possible.

His willingness in sharing her knowledge, insights, time, and effort to refine and broaden

the scope of this research is much appreciated.

Respondents, who are selected residents of Poblacion 20B, Davao City for their

full cooperation in answering the survey questionnaires and for their honest comments

and suggestions.

Parents and Friends, who have mostly been by our side. We have no words to

express our gratitude to you and the people who have become a part of our lives.

The Almighty Father, the Creator of all, who really is the source of knowledge

and wisdom that surpasses human comprehension, for providing the researchers with the

strength, courage, faith, and wisdom needed to complete this project.

I.C.N

C.S.L
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TABLE OF CONTENTS

PAGE

COVER PAGE

TITLE PAGE i

APPROVAL SHEET ii

ACKNOWLEDGEMENT iii

TABLE OF CONTENTS iv

LIST OF TABLES viii

LIST OF FIGURES x

LIST OF SCHEDULES xi

EXECUTIVE SUMMARY xii

CHAPTER 1 INTRODUCTION

Significance of the Study 2

Scope and Delimitation of the Study 2

Definition of Terms 2

Review of Related Literature and Studies 3

CHAPTER 2 MARKETING ASPECT

Product Description 4

Target Market 4

Area of Coverage 5

Consumer 5

Potential Market 5
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Demand-Supply Analysis 6

Pricing Structure 8

Factors Affecting the Product 9

Marketing Strategies 11

Sales Projection 14

Marketing/Selling Expenses 15

CHAPTER 3 TECHNICAL ASPECTS

Technical Requirements 16

Government Requirements 16

Business Location 18

Building Design 19

Operations/Production Process 21

Machine/Equipment Requirements 23

Product Schedule 24

Labor Requirements 25

Needed Utilities, Tools, Raw Materials and Supplies 26

Production Cost 29

Waste Disposal System 30

CHAPTER 4 ORGANIZATIONAL AND MANAGEMENT ASPECTS

Legal Form of Business 31

Organizational Structure 32

Organization and Key Personnel 33

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GANTT Chart 34

CHPATER 5 FINANCIAL ASPECTS

Financial Assumption 36

Total Projected Cost 37

Sources of Financing 38

Projected Financial Statements 38

Statement of Comprehensive Income 39

Statement of Changes in Equity 40

Statement of Financial Position 41

Statement of Cash Flow 42

Financial Analysis - Profitability Ratios 43

Return on Sales 43

Return on Equity 44

Return on Assets 44

Debt Ratios 44

Debt to Equity Ratio 45

Current Ratio 45

Payback Period 46

Break-Even Point Analysis 47

Notes to Financial Statements 48

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CHAPTER 6 SOCIO-ECONOMIC ASPECTS

Customers 52

Community 53

Environment 53

Employment 54

Government 54

REFERENCES 55

APPENDICES

A Permission Letter to Conduct Study 56

B Research Instrument – Survey Questionnaire 57

C Certificate of Grammarian 59

D Photos 60

CURRICULUM VITAE 61
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LIST OF TABLES

Title Page

Table 1 Potential Market 6

Table 2 Computation of Demand 7

Table 3 Supplied and Unsupplied Demand, and Market Share 8

Table 4 Product Price List per Wood Size 9

Table 5 Additional Price Lists 10

Table 6 Projected Sales 15

Table 7 5 Years Projected Sales 15

Table 8 Advertising Expenses 16

Table 9 Government Requirements 18

Table 10 Description of the Production Process 23

Table 11 Machineries/Equipment 24

Table 12 Production per Batch 25

Table 13 Manpower Requirements 26

Table 14 Utilities 27

Table 15 Tools 28

Table 16 Raw Materials and Supplies 29

Table 17 Production Cost 30

Table 18 Job Qualification and Job Description of the Employees 34

Table 19 Presentation of Gantt Chart of Activities 36

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Table 20 Presentation of Total Projected Cost 38

Table 21 Statement of Comprehensive Income 40

Table 22 Statement of Changes in Equity 41

Table 23 Statement of Financial Position (Balance Sheet) 42

Table 24 Statement of Cash Flows 43

Table 25 Return on Sales 44

Table 26 Return on Equity 44

Table 27 Return on Assets 45

Table 28 Debt Ratio 45

Table 29 Debt to Equity Ratio 45

Table 30 Current Ratio 46

Table 31 Payback Period 46

Table 32 Break-Even Point Analysis 47

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LIST OF FIGURES

Figure Page

Figure 1 Business Location 19

Figure 2 Light Touch Wood Crafts Store Perspective 20

Figure 3 Floor Plan of Light Touch Wood Crafts Store 21

Figure 4 Presentation of Production Process 22

Figure 5 Organizational Structure of the Business 33

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LIST OF SCHEDULES

Title Page

Schedule 1 Technical, Delivery, Furniture and Fixtures and 48

Depreciation Expense

Schedule 2 Income Taxes Payable 49

Schedule 3 SSS, PhilHealth, HDMF, Employee Contribution 49

Schedule 4 Sales 50

Schedule 5 Cost of Production 50

Schedule 6 Salaries and Wages 51

Schedule 7 Fuel Expense 51

Schedule 8 13th Month Pay 51

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Executive Summary

In the Philippines, Filipinos during the pandemic became more aware and

conscious about their surroundings specifically at home. In line with this, the proponents

came up with an idea of creating a store producing vintage and modern styles of wood

crafts that are equipped with high quality materials and affordable price.

Light Touch Wood Crafts is a store that caters variety of wood crafts, whether

ready-made or customized ones. It will become a store that is open to customers’ opinion

and can also recommend quality designs according to the preferred event or activity of

customers.

The proponent conducted and online survey in Barangay Poblacion 20B, Davao

City and used a total of 50 respondents as a sample size that would represent the total

population of 4,929. The result according to the survey is that 96% of the total

populations are the customers that are willing to buy and the remaining 4% are the unmet

demand. The results indicate that the business have huge possibility to prosper.

The financial aspect illustrated a favorable outlook; the proponents invest their

personal finds leading to a cumulative amount of ₱ 800,000.00. Every member will be

expecting a total amount of ₱ 200,000.00 which will be withdrawn every year. As per

financial ratio’s which further show the potential financial position, the Current Ratio for

the first year is 4.02 and increasing to

9.94 for the next five years, which showcases the positive capability of the business to

pay its obligations. The Net Profit Margin for the first year of operation is considerably at

31%, which signifies a more positive outlook for the company. This only means that for

every 1 peso of revenue, the company earns 31 pesos in net profit which significantly
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increases for the next five years to at least 35% or 1 peso of revenue equivalent to .35-

peso earnings. In addition, the Return on Assets, for the first year of operation generated

at least .50 or equivalent to 50% which is a positive figure for the organization that

indicates a strong financial and operational performance, as well as the ability to generate

considerable and favorable revenues.

As a result, the planned development of Light Touch Wood Crafts to be released

in the market is extremely realistic, taking into account the elements impacting the target

consumers' purchasing power, such as price, as well as the high regard for the high-

quality materials used to manufacture the products. It is convincing that the product has a

high probability of approval among target consumers and a favorable financial outlook.
 CHAPTER 1

INTRODUCTION

Light Touch Wood Craft intends to put forward this type of business to add

peculiar design in every household with peculiar taste, and for open-minded individuals

who want to explore and discover more of their artistic side. Individuals such as children,

men, and women, especially mothers who have a craving to discover their creativity and

make it into a masterpiece, are the main target. Light Touch Wood Crafts can also be a

helping hand for those people who do not want to design but just want to make their

personal things unique and artistic. However, this doesn’t mean that the proponents are

limiting its scope of target market, it’s just the main target markets are mostly

homeowners.

The main objective of this study is to identify if the proposed business is

beneficial in terms of its sales, market share that usually means greater sales, and if it can

make enough profit to recover the beginning investment of the partners and other

expenses.

To advance this intention, the team decided to display the products online because

of the current situation. In this time the social media will be the medium of advertisement

and communication of the customers whenever they have questions and requests.

Significance of the Study

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This section will provide the lists of various beneficiaries of the study and its

corresponding brief description.

To the household, the corners of the house can be eye-catching and unique because

of the wood crafts.

To the individuals, customizing the designs can be a medium for Children, Men, and

Women in expressing and discovering their creativity and imagination to produce a

masterpiece.

To the students, this study would enlighten business management students and help

prepare them with the business world.

Scope and Delimitations of the Study

Light Touch Wood Crafts is an online type of business that focuses on the

customized and requested design of the customer. Holidays and occasions are considered

in making the design fit with the theme in every household. Picture frames, key chains,

toy decorations, giveaways, hanging bookshelves, door décor, candle holders, lamp,

chopping boards, and other wood crafts are the intended products to produce by the

business.

Definition of Terms

Requested designs – means “made to order” where the design(s) is done by the

customer or the buyer.

Individuals – Children, Mother, Father, Sister, Brother, and others who are

interested in wood crafts decorations and designing.

Review of Related Literature and Studies Related Literature

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Wood reveals the history and culture of a substance that has been a central part of

human life throughout the world for thousands of years (Green, 2007). Wood crafting is

an instrument to bring the essence of having a nostalgic feeling towards individuals’

crafts and home décor.

Related Studies

Nowadays, the interest in woodworking from childhood to old age is rapidly

expanding (Kim, Sa-Ick, 2017). Wood crafting is the proposed business concept with the

idea of catering consumers in different ages with the interest in designing and

customizing things that would be able to satisfy their wants and needs.
 CHAPTER 2

MARKETING ASPECT

This chapter serves as the basis for the venture of light touch handmade wood

crafts in J.P. Laurel Ave., Bajada, Davao City, Davao del Sur. This covers the product

description, target market, area of coverage, potential market, the demand and supply

analysis, and the projection of sales. This will be identified and calculated to see if the

business becomes profitable from the start of the operation up to the coming years.

Furthermore, the pricing structure, marketing strategies, and competitors' analysis will be

discussed in this chapter.

Product Description

This business produces handmade wood products that are for exterior and interior

decorations that add to the beauty of the place, such as wall hanging, picture frames, wall

clock, headboards, bookshelves, candle holder, lamp, toy decoration, door decor and

other wood crafts. Pine, Cedar, Redwood, and Fir are some of the popular choices

because it is affordable but are with quality. It customizes and personalizes products

depending on what the customer’s desire; can be pictures, letters, and decorations.

Target Market

Wood crafts making are rising in fame and becoming popular. Light Touch is

established to cater the demands for wood crafts by homeowners and/or housewives.
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Newly built houses, houses having renovations, offices, and even normal houses are the

main target market. Decorations such as clocks, frames, wall decorations, bookshelves,

and small wooden coasters for seasonal celebrations are offered to the said target market

around Poblacion 20B, Davao City.

Area of Coverage

The store can be easily found since it will be located at the rent space right across

the street of Abreeza Mall and NCCC Mall at J.P. Laurel Ave, Bajada, Davao City. The

area was being decided by the entrepreneurs due to the number of people.

Consumer

Family members especially housewives would love this wood crafts design as

they see their names glorified every day. The business, however, doesn’t limit itself to

homeowners and housewives. Consumers who have interest in wood crafts are welcomed

and are happily entertained. Many of them are small woodcrafts that are simple in

construction, and yet highly popular to use as home décor.

Potential Market

Table 1. Presentation of Potential Market

Total Percentage (50
Respondents who said YES to
Household Respondents)
the Survey Questionnaire Total
Population

4,929 48 96% 4,732

The potential market of Light Touch Wood Crafts in the target area shown in the

table 1 is 4,732 households according to the survey conducted with a total of 50 sample

targeted market of respondents. The survey result showed that out of the 50 respondents,

96% are interested in buying wood crafts in case the availability is presented. Hence, the
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researchers have made it a basis for the business. The potential markets which are the

housewives and homeowners are a great help in the huge possibility of Light Touch

Wood Crafts to launch.

Demand-Supply Analysis

The demand for handmade wood crafts is rapidly increasing in the Philippines

because of the pandemic. The current situation that resulted to always staying at home

made homeowners and housewives be aware and conscious of their surroundings. The

researchers want to get the demand of the place to know if the target market would be

interested in the proposed products, and what are the scope and capacity of the business

to provide.

According to the food and agriculture organization of United Nations, the factors

that affect the demand for wood products are its price, the price of substitute products,

population, income levels, and the trends in consumer preferences. The long-term global

demand for wood products also includes the demographic changes wherein the world’s

population is projected to increase from 6.4 billion in 2005 to 7.5 billion in 2020 and 8.2

billion in 2030.

In 2021, approximately a total of 4,929 households’ population in Poblacion 20B,

J.P Laurel Avenue, Bajada, Davao City is found. This translates to four people per

household; hence, the assumed population would be 19,716. The data garnered from the

conducted survey with 50 respondents of the targeted market shows the projected demand

for wood crafts.

Table 2. Presentation of the Computation of Demand

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Result of 96% Respondents who Number of

Total Number of
coming from the answered to the Wood crafts
Respondents in
Total Household Survey bought
Percentage Total
Population Questionnaire per month
4,732 38 76% 1 3,596
4,732 9 18% 4 3,407
4,732 3 6% 8 2,271
50 100% 9,274

Shown in the table 2 is the projected demand of wood crafts in Poblacion 20B,

Davao City based on the survey conducted by the researchers of which generated a total

of 4,732 households or 96% of total household population, for a total of 9,274 crafts

every month.

Table 3. Presentation of Supplied and Unsupplied Demand, and Market Share

Demand Competitor
monthly (per Share or Unsupplied Market Share in the
Target Market items of wood Demand Demand Unsupplied Demand
crafts) supplied by
Competitors
Homeowners 9,274 1,575 7,699 1,600
Total 9,274 1,575 7,699 1,600

Table 3 shows the Supplied and unsupplied analysis off woodcraft’s business in

the Municipality of Davao City. The total demand supplied by competitors in J.P. Laurel

Ave., Bajada, Davao City was when the researchers surveyed some of the homeowners to

be able to get the total average sales of wood crafts. The researchers found out the

number of demands supplied by competitors of wood crafts around Davao City has a total

of 1,575 of wood crafts, which leaves a total of 7,699 units of unsupplied demand.

Moreover, the market share in the unsupplied demand was estimated to have a total of

1,600. The fact that the demand of wood crafts is increasing, it is a great advantage of the

proposed business Light Touch Wood Crafts, however, since the business is just starting
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it is quite safe to start the business in minimum.

Pricing Structure

Table 4. Product Price List per Wood Size

Price
Sizes
3mm 6mm 10mm 12mm 18mm
(inches)

3x3 ₱ 40 - 55 ₱ 45 - 60 ₱ 50 - 65 ₱ 55 - 70 ₱ 60 - 75
3x6 ₱ 55 - 75 ₱ 60 - 80 ₱ 65 - 85 ₱ 70 - 90 ₱ 75 - 100
4x6 ₱ 80 - 90 ₱ 85 - 95 ₱ 90 - 100 ₱ 95 - 105 ₱ 100 - 110
6x6 ₱ 95 - 110 ₱ 100 - 115 ₱ 105 - 120 ₱ 110 - 125 ₱ 115 - 130
9x6 ₱ 115 - 135 ₱ 120 - 140 ₱ 125 - 145 ₱ 130 - 150 ₱ 135 - 155
12x6 ₱ 150 - 160 ₱ 160 - 175 ₱ 170 - 190 ₱ 180 - 200 ₱ 200 - 220
18x6 ₱ 170 - 180 ₱ 180 - 200 ₱ 190 - 220 ₱ 210 - 240 ₱ 225 - 255
3x12 ₱ 115 - 135 ₱ 120 - 140 ₱ 130 - 145 ₱ 140 - 150 ₱ 155 - 165
4x12 ₱ 130 - 145 ₱ 135 - 150 ₱ 140 - 165 ₱ 150 - 170 ₱ 165 - 185
6x12 ₱ 150 - 170 ₱ 160 - 175 ₱ 170 - 190 ₱ 180 - 200 ₱ 200 - 220
9x12 ₱ 185 - 210 ₱ 190 - 220 ₱ 220 - 250 ₱ 240 - 270 ₱ 270 - 330
12x12 ₱ 230 - 250 ₱ 250 - 270 ₱ 270 - 290 ₱ 275 - 325 ₱ 350 - 500

The table 4 shows the prices of woodcrafts of various sizes and thicknesses. Sizes

3x3, 3x6, and 4x6 are normally for small wooden coasters and holiday ornaments; 6x6,

9x6, and 12x6 are sizes for house decorations such as candle holder, wooden clock,

chopping board, and picture frames; 18x6 is normally for wood signs; 3x12 and 4x12 are

for utensils such as wooden ladles, spoon and fork; 6x12, 9x12, and 12x12 are for

bookshelves and racks. For customized items, they can add photos, names, texts, logos,

designs, and anything else to any product they want to be personalized according to their

preferences. The cost of customized products is determined by their size and optional

features.
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Table 5. Additional Price Lists

Sizes Texts Pictures
3x6 35 - 40 20 - 30
4x6 40 - 45 30 - 40
6x6 45 - 50 40 - 50
9x6 50 - 55 50 - 60
12x6 55- 65 60 - 70
18x6 65 - 75 70 - 80

The table 5 displays the additional payments according to the size of the goods

chosen by consumers/customers.

Factors Affecting the Product

The mentioned factors have an impact on the final product and the manufacturing

process. It is discussed below how the business will address the factors and how it will be

utilized to run the company in the long-term.

a. Suppliers

The business will directly get the raw materials from the negotiated suppliers. Our

suppliers are Pallet Namo Davao Est 2018, located at Pan- Philippine Highway 2nd floor

Right Wing, Km. 17 Ilang Center. Matimco House of Wood Davao in Ecoland branch,

Ang Panday Construction Supplies placed at Coca-Cola Village, Talomo. Timborana

Wood Industries located at McArthur Highway, Matina, and other local wood suppliers

in Davao City. There are wood stores in online shopping platforms that can also supply

the business, including Shopee and Lazada.

b. Price of Raw Materials

Since the raw material prices are volatile, the business will assess the suppliers
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and will monitor market wood prices on a regular basis. The average price of mahogany

slabs and mini logs are 2 inches in the market with a length of 6ft is ₱250, and 1.5 inches

with a length of 7ft is ₱370 respectively. While the White Oak slabs and logs with 2.4

inches with a length of 8.7ft is ₱2,500, and 3 inches of wood with a length of 8ft is

₱274.83.

c. Labor

The owners of Light Touch Handmade Wood Crafts will use their skills and

creativity to create and produce the woodcrafts. However, to reach the target, the business

will add employees to assist with the production. Potential employee's creativity is to be

put to a test by having them perform things like woodworking and creating. The business

would learn about the skills and potential in handmade woodcrafts, which would be an

asset to the business.

d. Price Competition

As there are so many woodcraft enterprises in Davao City, we need to emphasize our

advantages over the competition. The prices of Light Touch Handmade Wood Crafts

products will be regulated by the owners, who will assess through the prices of raw

materials. Monitor raw material prices and evaluate the product prices to see if they are

competitive with other competitors while also being cost-effective.

e. Consumer

As time goes by, the possibility that consumers would lose interest in the wood

crafts product is very high. Consumers may convert their attention to other product

competitors such as Pottery, Stoneware, Porcelain, and Glass Crafting businesses.

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f. Income Levels

An average or even lower percentage consumers from high, middle, and even

lower levels would highly be interested in the offered products. Lower income and

different priorities are the main source of disinterest towards wood crafts.

Marketing Strategies

One of the objectives of Light Touch Handmade Wood Crafts is to expand

globally and internationally so that the company can provide high-quality products and

reliable service to global and international customers. This allows the company to expand

and offer not only your current product to a new consumer base, but also to invest in and

introduce new items to a much larger customer base, resulting in increased sales. Aside

from establishing a name, the company hopes to develop a stronger relationship with its

customers, who they

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feel will help market the brand. The following are the strategies for promoting Light

Touch Handmade Wood Crafts' products.

The store will be introduced within Davao City via social media platforms

promotion, and the orders will be catered by contacting us in social media and telephone

number and delivered to the potential customers.

a. Price

According to the results of the survey, 90% of respondents are willing to spend

10,000 on the products at least 2 to 3 times a month, and the price is a major component

in attracting customers. The prices are determined by the product's size and weight, and

they are not fixed since we will alter the prices based on the costs of minor and major

materials, as well as other fees such as transportation and delivery. The pricing of

customized products will also change; adding text will cost 30-90 pesos and adding

photographs will cost 40-150 pesos. The business will ensure customers that the products

they will receive are good quality, affordable and durable.

b. Social Media Platforms

Since everyone is on social media and serves as a medium of communication, the

company decided to use it to promote our brand and meet client demands. Our social

media channels, such as Facebook and Instagram, allow customers to inquire and place

orders. We will advertise our product by providing photographs and information about

new products that the company

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offers, and regularly post seasonal promos, purchase discounts and other promos that the

business will offer.

c. Discounts and Promos

Light Touch Handmade Wood Crafts would like to increase its order volume,

especially during the holiday season. Every holiday, we will provide seasonal discounts

to clients based on the volume of the product and the number of products that they will

purchase.

d. Location

The store located at Gahol Street, J.P. Laurel Avenue, Bajada, Davao City, where

it is more convenient for the households and expose to potential customers.

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Sales Projections

Table 6. Projected Sales

Product Product Cost No. of Unit Total Cost Monthly Cost Annual Cost

House
299.00 10 2,990.00 71,760.00 861,120.00
Decoration
Small Wooden
Coasters 160.50 8 1,284.00 30,816.00 369,792.00

Woods Signs 380.30 7 2,662.10 63,890.40 766,684.80

Wall Racks 450.00 7 3,150.00 75,600.00 907,200.00

Holiday
199.20 6 1,195.20 28,684.80 344,217.60
Ornaments
Wooden
199.50 12 2.394.00 57,456.00 689,472.00
Utensils

Total 50 ₱3,938,486.40

Table 6 shows the projected sales of the proponents regarding the proposed

products of wood crafts. The selling price was determined based on the provided price

lists and the unit sales were estimated. Firstly, the sales were determined by multiplying

units' sales from the selling price. Secondly, the monthly sales were multiplied by 4

weeks from the number of weekly sales. Lastly, monthly sales were multiplied by 12

months to get the annual sales. Hence, the total of annual sales is 3,938,486.40 pesos.

Table 7. 5 Years Projected Sales

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Annual
Sales 3,938,486.40 4,174,795.58 4,425,283.32 4,690,800.32 4,972,248.34

Table 7 shows the proponents’ assumption that, the sales will increase by 6% per
 15

year during the 5-year market operation. The sales are being calculated based on the

demand of woods crafts in the first year of operations and multiplies by 6% on the

following years.

Marketing/Selling Expenses

Table 8. Advertising Expenses

Advertising Expenses Quantity Price Total Amount

Tarpaulin 5 410 2,050

Posters 100 25 2,500
Total Annually 4,550
Table 8 shows the marketing expenses that will be incurred in promoting Light

Touch Wood Crafts to the market. The cost includes tarpaulin which will cost 410 with

the size 3x4 ft. Posters which cost 25, with a total of 4,550 advertising expenses annually.

Light Touch Wood Crafts will do some specific strategies collaborating with the

Social Medias to advertise the proposed products of business such as Facebook,

Instagram, and websites.

 CHAPTER 3

TECHNICAL ASPECTS

This aspect provides details to the technical side, the flow of the business

operation and some other processes needed to conduct the proposed business.

Particularly, this part discusses government requirements, business location, building

design, floor plan an overall view of the wood crafting store, production process, labor a

machine requirement, production schedule, labor requirement, needed utilities a supply,

production cost a waste disposal system.

Technical Requirements

The priority of the Light Touch Wood Crafts before starting the business is to

know and be aware in planning to purchase the needed equipment, some requirements

and other permits. The technical specification is a set of define document requirements

that a product or assembly must meet and exceed.

Government Requirements

Before starting the operations of the business, regulatory requirements must be

secured for the Light Touch Handmade Wood Crafts business' legality. The below

statements show the essential steps to secure the acquisition of the license and permits

required for the commencement of business operation.

The first step in putting up wood crafts station is to register the business. Second,

secure a Barangay Clearance that certifies that the business has complied with the local
 17

barangay requirements where it is located. Third, handmade wood crafts should obtain

the Mayor’s Permit or a business permit from the local government of the Municipality of

Davao City. Fourth, register the business at the Bureau of Internal Revenue (BIR) for the

payment of the business taxes. The registration with the BIR involves obtaining and

registering a tax identification number (TIN), obtaining BIR registered official receipts

and invoices, registering the business’ books of accounts, and paying applicable fees.

Lastly, register the business to the Social Security System (SSS), Home Development

Mutual Fund (Pag-ibig Fund) and Philippine Health Insurance Corporation (PhilHeatlh).

Moreover, there is a need to secure a permit from Bureau of Fire and Protection (BFP) to

ensure that the structure of the building is safe from fire.

Table 9. Government Requirements

Government Agencies
Securities and Exchange
Commission
Poblacion 20 B Barangay Hall
Business Permit and Licensing
Office (Municipality of Davao City)
Bureau of Internal Revenue (BIR)
Social Security System (SSS)
Philippine Health Insurance
Corporation (PhilHealth)
Home Development Mutual Fund
(Pag-IBIG Fund)
Bureau of Fire and Protection
(BFP)
Requirements Needed
 Business registration including name of
the business.
 Barangay Clearance
 Business Permit/Mayor’s Permit
 BIR Form 1903
 Taxpayer Identification Number (TIN)
 SSS Membership/Registration
 PhilHealth Membership/Registration
 Pag-IBIG Fund
Membership/Registration
 BFP Permit
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Business Location

Figure 1. Business Location

Figure 1 shows the location of the proposed business which will be located at

Gahol Street, J.P. Laurel Ave., Bajada, Davao City, 8000, Davao del Sur. The researchers

choose this location to attract more customers because it is beside the national highway.

It is also near the two big shopping malls which are the Abreeza Mall and the NCCC

Mall. As far as the researchers are concerned, the said location is not yet confirmed to be

available because the location was only stated available in the application, Google Earth.
 19

Building Design

Figure 2. Light Touch Wood Crafts Store Perspective

Figure 2 shows the overall image of the proposed building of Light Touch

Handmade Wood Crafts located at Gahol Street, J.P. Laurel Ave., Bajada, Davao City,

8000, Davao del Sur.

Light Touch Handmade Wood Crafts will rent a commercial space located at

Gahol Street, J.P. Laurel Ave., Bajada, Davao City. The building's size is 60 square

meters, and the garage would be approximately 6.25 meters. The overall view of Light

Touch Handmade Wood Crafts building will attract the customers, will pay a visit

because of its warm and welcoming atmosphere, and get interested with the products. In

addition, the building renovated will be made by concrete. The business will engage in a

third-party agreement for the renovation of the building with an estimated cost of 9,399

pesos per square meter or a total of ₱ 450,000.00.

 20

Figure 3. Floor Plan of Light Touch Wood Crafts Store

Figure 3 shows the floor plan of Light Touch Wood Crafts Store wherein there is

one comfort room, working station, office, six product display shelf, cashier area, waiting

area, and two fire exits. The business also decided to place the delivery vehicle in the

garage outside the building.

 21

Operations/Production Process

Figure 4. Presentation of Production Process

Figure 4 shows the production process of wood crafts from air drying or

seasoning to its finishing. Commonly, products offered like House decorations, small

wooden coasters, wood signs, racks, holiday ornaments, and utensils are made in this

kind of process.
 22

Table 10. Description of the Production Process

Light Touch Handmade Wood Crafts production process will take about a minimum of
30 minutes to maximum of 2 working hours, product quantity, and design complications
of the wood crafts. Some designs of finished products will be displayed at the store to be
looked at by the new and waiting customers. For customers opting for delivery, the
delivery time depends on the customers'
desired location.
Stages Process
The pieces of woods ordered are then air dried or seasoned at an allotted
time of 2 months to avoid shrinking, splitting, and to obtain the favorable
Stage 1 texture for carving.
The available woods in the form of logs will be cut into planks
Stage 2
and in accordance to the desired thickness and length.
Using a pencil, decorative patterns will be drawn or sketched in the wood as
a guide and as a form of visualizing for the final
Stage 3
output.
Stage 4 The carving tool will then be used to carve the sketched wood.
The craftsmen will inlay the wooden handicraft with metal, bone,
wood, and inks which will give contrast effect and enhance the intricacies of the carved
Stage 5
design.
For the shelves, racks and other crafts that need joining, joinery will be the
next stage. The different parts of carved wood are joined together to produce
Stage 6
a complete functional craft.

Polyacrylic or varnish will be used in applying the finishing serving as a

protective layer and avoiding it from dirt and moisture. Finishing will
enhance the appearance of the wood and make it look with quality by
Stage 7
highlighting its color and figure.

Table 10 shows the production process of Light Touch Wood Crafts which will be

made by the craftsmen hired by the business.

The service process will start at the front desk, he/she shall entertain the

customers and give necessary instructions in how to submit and request for their desired

designs. After that, orders, contracts, and deadlines will be decided and made. The

deliveryman will then be delivering the orders to the customers' desired address.
 23

Machineries/Equipment Requirements

The tables below are the lists of machines and equipment that are used in creating

and carving the product with their corresponding cost, number of units, 3 years of its

useful life and 5 years useful life for the motorcycle. It also indicates the total cost that

the business will spend for the materials required.

Table 11. Machineries/Equipment

Equipment and Cost per # of Total
Residual ValueUseful Life
Machineries unit Units Total Cost Depreciation

1600W
240V/60Hz ₱ 2,950
1 ₱ 2,950 1,450 3 years 500
Circular Saw

1600W Wood
2,100 2 4,200 2,160 3 years 680
Router Trimmer
1180W 220V
1,800 2 3,600 1,860 3 years 580
Power Drill

1100W 200V
Electric Wood Planer 1,860 2 3,720 1,800 3 years 640

280W
220V/60Hz
Corner/Random Orbital 1,600 2 3,200 1,580 3 years 540
Sander

2000W 220V
Electric Nail Gun 875 2 1,750 820 3 years 310

650W Jigsaw 2,500 1 2,500 1,300 3 years 400

Motorcycle 84,000 1 84,000 67,200 5 years 3,360
Total ₱ 105,920 ₱78,170 ₱7,010

Table 11 shows that most of the machineries and equipment to be used for the

production will be coming from different local stores here in Davao; some materials are

from stores in Cebu, and other areas in Visayas and Mindanao. Local industrial stores in

Davao, including Dariv Power Tool Trading, Unified Dragon Industrial Tools, Grand
 24

Imperial Industrial Tools Supplies, Citi Hardware, Wilcon Depot, J.H Hardware Co., Ace

Hardware, Davies Paints, and other stores in online shopping platforms.

Production Schedule

The Light Touch Wood Crafts will be open from Mondays to Fridays at 8:00 AM

– 10:00 PM, with a noon break. On Saturdays, the store will open at 9:00 AM – 11:00

PM. As the store opens and starts its service, online orders will start to cater as well. The

duty will be divided into morning and afternoon shifts, morning shift will start from 8:00

AM – 5:00 PM and afternoon shift will start from 5:00 PM onwards. Employees will start

their duties at the store and will be closed on Sundays and holidays, but still be catering

for online orders and deliveries.

Table 12. Production per Batch

Products Units Produced per Batch

House Decorations 12

Small Wooden Coasters 8

Wood Signs 5

Racks 7

Holiday Ornamentals 6

Utensils 12

Total 50
 25

Labor Requirements

Table 13. Manpower Requirements

Job No. of 13th
Emplo Monthly Salary
Position yees Month Pay SSS Pag-IBIG PhilHealth Net Pay

Manager 1 ₱11,200.00 ₱929.60 ₱504.00 ₱224.00 ₱448.00 ₱13,305.60

Craftsman 3 28,512.00 2,366.49 1,283.04 570.24 1,140.48 33,872.25

Delivery Man 1 9,504.00 788.83 427.68 190.08 380.16 11,290.75

M onthly 49,216.00 4,084.92 2,214.72 984.32 1,968.64 58,468.60

Annually ₱590,592.00 ₱49,019.04 ₱26,576.64 ₱11,811.84 ₱23,623.68 ₱701,623.20

Table 13 above shows the required manpower as well as their functions in the

business. Light Touch Handmade Wood Crafts will require a manager who will lead the

business, a craftsman who will make, customize, and polish the crafts, and a delivery man

to handle deliveries. Employees should work at least six (6) days a week for a total of

eight (8) hours of duty, beyond that will receive overtime pay. The manager will get a

monthly basic pay of ₱11,200; the craftsman and deliveryman receive its salary based on

the current minimum wage of ₱396 per day, as well as overtime compensation. The

salary will be received by the employees on the 15th and 30th day of the month, and 13th

month pay is set up by the business for long-term commitment.

Employee and wage-related benefits are assured by the store to the employees for

better performance. Government contributions including SSS, Pag-IBIG, and PhilHealth

are directly deducted at the releasing of salaries on the 30th day of the month. The total

monthly salary cost for the employees is

₱49,216.00 and the total annual salary cost amounts to ₱590,592.00 and the annual net

pay would be ₱701,623.20.

 26

Needed Utilities, Tools, Raw materials and Supplies

Table 14. Utilities

Total Costing
Name Source
Monthly Annual
Water Davao City Water District ₱ 1,000.00 ₱ 12,000.00
Electricity Davao Light ₱ 4,000.00 ₱ 48,000.00
Fuel/Gas Gas and Oil ₱ 2,000.00 ₱ 24,000.00
Rent Building ₱ 10,000.00 ₱ 120,000.00
TOTAL ₱ 17,000.00 ₱ 204,000.00

Table 14 shows the list of utilities needed by the business. The main utilities of

Light Touch Wood Crafts are the electricity provided by Davao Light and Power

Company and water system by Davao City Water District. This will be used for the store

lights, overall ambience and for some equipment to function. A budget of 1,000 monthly

is allotted for the water bill, 4,000 monthly for electricity, 2,000 monthly for fuel or gas

and oil: and 10,000 monthly rent fees.

 27

Table 15. Tools

Name of Tools Cost per unit # of Units Total Cost
Set of Chisels 495 2 990
Framing Square 375 3 1,125
Blades for Saw 1,540 2 3,080
Metal Cutting Disc 75 9 675
Standard Twist Drill Bits Set 185 2 370
Steel Rotary Rasp Drill Bits Set 130 2 260
Dead blow Hammer 425 2 850
Nail Set 200 12 2400
Quick Grip Clamp 250 3 750
Sharpening Stone 70 6 420
Wood Filler 500g 225 60 13,500
Pocket Hole Jig 799 2 1,598
Water-based Wood Primer DV-1300 White 230 60 13,800
Washable Paint Brush Set (3/32”, 5/32”,
6/32”, ¼”, 12/32”, ½”, 11/16” 330 9 2,970
& 1”)
Acrylic Aqua-based Quick Dry Paint 1
Liter (Black, Light and Dark Brown,
210 60 12,600
Wood Brown and White)
3ft Dried Local Pampas Flower
14 192 2,688
(Reed, Rust and Fluffy) per stem
3mm Macrame Cord Rope (Ash White and Tan) 230 24 5,520
Wood Glue Water Resistant 1 gallon 480 6 2,880
Sketching Set 1000 3 3,000
Total Cost ₱ 69,476

Most of the tools used for the production will be coming from different local

stores here in Davao; some materials are from stores in Cebu, and other areas in Visayas

and Mindanao. Local industrial stores in Davao, including Dariv Power Tool Trading,

Unified Dragon Industrial Tools, Grand Imperial Industrial Tools Supplies, Citi

Hardware, Wilcon Depot, J.H Hardware Co., Ace Hardware, Davies

Paints and other stores in online shopping platforms.

 28

Table 16. Raw Materials and Supplies

Type of Size Cost per No. of
Height (ft)
Wood (inches) Unit Units Total Cost
Mahogany Slabs 2 6 ₱ 250 288 ₱72,000.00

Mini logs
1.5 7 370 24 8,880.00

White Oak Slabs 2.4 8.7 2,500 12 30,000.00

Logs 3 8 274.83 24 6,595.92

Monthly ₱117,475.92
Annually ₱1,409,711.04

Light Touch Wood Crafts' objective is to assure the consumers that the products

that the store offers are affordable and with good quality, therefore the raw materials

should be durable for the process and affordable as well. The table presented below is the

list of required raw materials that the business will use for the production. These are the

woods, and their sizes, heights

and their corresponding prices.

Light Touch Wood Crafts required raw materials will be coming from different

local stores here in Davao City. Since our negotiated suppliers are around Davao, we will

get the good-quality materials directly from the stores. International suppliers will be

Edgelive Creations Co., Lancaster Live Edge, LuYi

Company, and other international wood suppliers. We would also like to support

the wood stores in Luzon areas, since we found stores that are more affordable and

durable, Filtra Timber Trading Makati located at Yupangco Building, Bel-Air, Makati,

1209 Metro Manila. The store is still looking for

 29

stores where it is much lesser but good quality. There are wood stores in online shopping

platforms that can also supply the business, including Shopee and Lazada, which we

would like to support also.

Production Cost

Table 17. Production Cost

Year 1 Year 2 Year 3 Year 4 Year 5
Direct Materials 1,409,711.04 1,452,002.37 1,495,562.44 1,540,429.31 1,586,642.19
Direct Labor 406,467.00 406,467.00 406,467.00 406,467.00 406,467.00

Technical Equipment
21,920.00 - - 21,920.00 -

Tools & Supplies 69,476.00 71,560.28 73,707.09 75,918.30 78,195.85

Utilities 60,000.00 61,800.00 63,654.00 65,563.62 67,530.53

Total Production Cost

1,967,574.04 1,991,829.37 2,039,390.53 2,110,298.23 2,071,372.04

Table 17 is the representation of the projected cost and/or the computed

production cost based on the projected sales in units determined using the demand and

supply computation.

Waste Disposal System

The management will observe and comply to the strict implementation of the
 30

municipality ordinance. In compliance with the Republic Act 9003 or the Act for

providing Ecological Solid Waste Management Program (ESWMP), as permandated by

the Municipality of Davao City, Davao del Sur Ecological Solid Waste Management

Ordinance of 2004 (Municipal Ordinance 006) the mandatory segregation of solid waste

which is the segregation of waste at source by generators as household and all

establishments is mandatory. To ensure the compliance, the management will provide

two sets of garbage bins labeled as biodegradable, non-biodegradable, and recyclable. An

assigned employee will segregate the garbage every end of the working day and place it

on the waster area in preparation for the collection by the sanitary sewage vehicle of

Davao Garbage Collector. In addition, wood wastes or scraps are strictly segregated with

the intention of selling it to buyers of this type of waste.

 CHAPTER 4

ORGANIZATIONAL AND MANAGEMENT ASPECT

The Management aspect is one of the important aspects in establishing a business.

To achieve this, management must be able to plan all activities to become productive and

competitive in the industry through human resource, financial capability, and new

technologies. This chapter presents the basic consideration informing the organization,

form of ownership, organizational structure, business personnel qualification, and Gantt

chart. The main objective of this plan is to determine the option effectiveness of the

organization set-up.

Legal Form of the Business

The proposed business is a partnership type of business. The partners who agreed

to form a partnership decided to invest in the business because it is more convenient to

form and organize. A partnership type of business has many advantages. It is easy to

form but considerable amount of time should be invested in developing the partnership

agreement. Aside from being the easiest to form or organize, it is also the easiest to

dissolve. The availability of the business' capital is greater because of more investors, and

this would definitely help in having greater borrowing capacity.

The tasks and responsibilities of each partner are contributed properly and fairly.

The profit sharing equal if the business acquires more profit, likewise to the losses which

will be distributed equally to the partners. To make the partnership legal, it will be
 32

registered at the Securities and Exchange Commission (SEC).

ORGANIZATIONAL STRUCTURE

MANAGER

CRAFTSMEN
DELIVERYMAN

Figure 5. Organizational Structure of the Business

The Light Touch Wood Crafts organizational structure is shown above. This

proposed business is a small-scale type that’s why there is no need to have a lot of staffs.

The manager will act as the representative of the two partners of the business. Therefore,

to fill out the vacant positions the business will hire other people. The manager will lead

and control the business operations, decision making and management. The craftsmen are

the main character of the business that will make, customize, and polish the wood crafts.

The deliveryman is assigned to do the deliveries made by the customers.

 33

Organization and Key Personnel

Table 18. Job Qualification and Job Description of the Employees

Position Job Qualifications Job Description

● A graduate of Business ● Maintains the number of staffs,

Administration course. recruitment, selection, orientation,
● A strong understanding of and training of employees.
customer and market dynamics Establishes strategic business goals by
and requirements. gathering information regarding the
● Have the knowledge of business, services and operations.
developing, maintaining and ● Maintains the quality service of the
Manager delivery of market strategies to business by producing high quality
meet the objectives of the products and
company. hiring quality employees.

Can follow instructions properly and

●Good moral and patience
able to suggest ideas that can help the
towards pressuring situations.
overall result of the product.
● Have the ability to understand
The ability to apply the exact design
clearly and effectively the given
of the requested crafts of the
instructions.
customers.
● Best at handling and making
● Best at communicating with the
Craftsman crafts artwork with confidence
customers and manager for
and at
clarifications about the
its best skills.
product.

Knows how to drive and deliver

●
● At least 18 years old but not products to designated locations of
more than 40 years old. customers.
● Basic knowledge in reading, ● Makes an effort in contributing to
writing, and can follow simple team effort by accomplishing related
Deliveryman instructions. results as needed, and takes good care
● Bearer of Driver’s License of the products
delivered.
 34

GANTT Chart

Table No. 19 shows the six (6) month activities to start Light touch Wood Craft

production. Each month determines the necessary move to provide the variety products of

wood crafts. It starts by doing market research through a distributed survey questionnaire

to the selected fifty (50) residences from Poblacion 20B Davao City. After doing the

survey, the researcher started doing a feasibility study for about one to two months in

which the different aspects were thoroughly discussed in order to determine if the

business will be feasible to establish. On the second month, since the nature of the

business is partnership, the partners will therefore contribute the corresponding amount of

money in order to finance the business. After accumulating the invested money for

financing, the business owners will acquire all the necessary requirements and permit to

establish a business then the building construction with two months’ durations. It is on

the fourth month when canvassing and purchasing the machineries, pieces of equipment,

raw materials and the supplies needed has to be done. Light Touch Wood Craft will visit

the different target markets for resellers. The recruitment and hiring employees as well as

the training of the qualified employees happens in the fifth month. After everything has

been done during the sixth month span, Light Touch Wood Craft production will be open

and launches the business.

 35

Table 19. Presentation of Gantt Chart of Activities

No. of Duration in Months
Activities Months 1 2 3 4 5 6
Market research via
survey of the desired
target 1
market
Start of feasibility study 2
Investment of
Partnership for the
financing of the 1
business
Acquiring of all
government
requirements and 1
permits
Building renovation 2
Canvassing of
machineries,
equipment, tools,
raw materials and 1
supplies
Purchasing of
machineries,
equipment, tools,
raw materials and 1
supplies
Hiring of qualified
employees (Craftsmen,
manager, and
1
deliveryman)
Training and
orientation of employees 1

Launching of the business

 CHAPTER 5

FINANCIAL ASPECT

Making a brand and opening a business is an appealing option for those

individuals who are business-minded. Flexibility and control must be given importance

and be countered with a realistic appreciation of financial aspects and responsibilities that

comes with it. Planning is a consistent effort at all stages of the business, and the

persistence to have the knowledge of the available resources for both guidance and

funding.

This chapter will present the presumption of the proposed business. These are the

Statement of financial position, income statement, statement of owner’s equity, and cash

flow. The financial ratios are also showed in this chapter to show the capacity and

liquidity of the business.

Financial Assumption

The proponent provides the following financial assumptions ;( 1) Sales and other

sales will increase by 6% every year for the 5-year business operation. (2) 3% deducted

to Sales as for the sales discount. (3) For the 3 years, the craftsman and deliveryman will

be paid at 396 minimum wage rates, and the manager will be paid at 400 minimum wage

rates. Wage rates will increase to 418 in the coming years for craftsman and deliveryman,

and 424 for managers.

(4) The business is a general partnership, therefore will be subject to tax on all taxable
 37

activities by 32% income tax which will be paid quarterly leaving a last quarter income

tax liability to be paid in the next taxable year. In addition, each partner will be taxed

accordingly as individual tax payers but their individual taxes will not be covered in this

business project. (5) All employees will receive a 13th month pay equivalent to their

corresponding salary in a month. (6) Each partner is assumed to withdraw ₱100,000 for a

total of ₱200,000 every year beginning from the second year. (7) The raw materials,

utilities, tools and supplies, and gas and oil will increase by 3%. (8) In every 2 years 10%

of the advertising expense will increase, and 5% in the permit and licenses as well as in

rent expense. (9) The partners assumed that in every year there will be P500 per month

added in the repairs and maintenance.

Total Projected Cost

Table 20. Presentation of Total Projected Cost

Light Touch Wood Crafts Station Projected Cost
Fixed Assets: Cost
Furniture and Fixture 59,300.00
Sales Equipment 84,000.00
Technical Equipment 21,920.00
Tools & Supplies 66,476.00
Working Capital:
20,000.00
Repair and Maintenance Gas and Oil
24,000.00
Rent Expense
120,000.00
Employees Benefits & Contribution
111,031.20
Advertising
4,550.00
Utilities 60,000.00
Depreciation 9,382.00
Permits and Licenses 10,000.00
Salaries and Wages 590,592.00
Total Projected Cost ₱1,181,251.20
 38

Table 20 shows the total projected cost. The initial investment is to be used in the

initial expenses needed to start the operation of the business. The cost would be taken

only from the capital contributed by the partners.

Sources of Financing

The total projected cost is ₱ 1,181,251.20. The business is a partnership of two,

each partner will contribute cash amounting to ₱600,000 from their personal assets, and

therefore a total investment of ₱ 1,200,000 is set up by the two partners. In this way,

having incurring obligations from financing capital through borrowings and loans can be

avoided by the business.

Projected Financial Statements

Table 21 shows the income statement that will indicate if the business is

profitable or not for a given year, and it is provided in this table for the company's five-

year performance. We assume that our projected sales will be met, and that after

deducting the sales discount and added the other income, the net sales deducted by VAT

for year 1 is P3, 375,091.99. The net income for year 1 is P628, 612.23 with an income

tax of P295, 817.52 deducted by, and an operating expense of P483, 088.20.
 39

Table 21. Statement of Comprehensive Income (Income Statement)

Light Touch Handmade Wood Crafts
Statement of Comprehensive Income
Projected Five Years
(Amounts in Philippine Peso)
      Year 1 Year 2 Year 3 Year 4 Year 5

Revenue
Sales 3,938,486.40 4,174,795.58 4,425,283.32 4,690,800.32 4,972,248.34
Less: Sales Discounts 118,154.59 125,243.87 132,758.50 140,724.01 149,167.45
Total 3,820,331.81 4,049,551.71 4,292,524.82 4,550,076.31 4,823,080.89
Other Sales 15,000.00 15,900.00 16,854.00 17,865.24 18,937.15

Net Sales 3,835,331.81 4,065,451.71 4,309,378.82 4,567,941.55 4,842,018.04

Less: VAT 12% 460,239.82 487,854.21 517,125.46 548,152.99 581,042.16

Net of VAT 3,375,091.99 3,577,597.50 3,792,253.36 4,019,788.56 4,260,975.88

Less: Cost of Sales
Raw Materials 1,409,711.04 1,452,002.37 1,495,562.44 1,540,429.31 1,586,642.19
Direct Labor 406,467.00 406,467.00 406,467.00 406,467.00 406,467.00
Machineries& Equipment 21,920.00 - - 21,920.00 -
Tools & Supplies 69,476.00 71,560.28 73,707.09 75,918.30 78,195.85
Utilities 60,000.00 61,800.00 63,654.00 65,563.62 67,530.53
Total Cost of Sales 1,967,574.04 1,991,829.37 2,039,390.53 2,110,298.23 2,071,372.04
Gross Profit
1,407,517.95 1,585,768.13 1,752,862.83 1,909,490.33 2,189,603.84
Less: Operating Expense
         
 
Selling Expenses  
Advertising Expense 4,550.00 4,550.00 5,005.00 5,005.00 5,505.50
Repairs and Maintenance 20,000.00 20,500.00 21,000.00 21,500.00 22,000.00
Gas and Oil 24,000.00 24,720.00 25,461.60 26,225.44 27,012.20
Depreciation Expense – Sales
3,360.00 3,360.00 3,360.00 3,360.00 3,360.00
Equipment
Total     51,910.00 53,130.00 54,826.60 56,090.44 57,877.70
General and Administrative Expense  
Salaries & Wages (Indirect Labor) 248,448.00 248,448.00 248,448.00 262,848.00 262,848.00
Rent Expense 120,000.00 120,000.00 126,000.00 126,000.00 132,300.00
Employee Benefits & Contribution 46,708.20 46,708.20 46,708.20 46,708.20 46,708.20
Permits and Licenses 10,000.00 10,000.00 10,500.00 10,500.00 11,025.00
Depreciation Expense - Furniture
2,372.00 2,372.00 2,372.00 2,372.00 2,372.00
and Fixtures
Depreciation Expense - Technical
3,650.00 3,650.00 3,650.00 3,650.00 3,650.00
Equipment
Total   431,178.20 431,178.20 437,678.20 452,078.20 458,903.20
Total Operating Expense
483,088.20 484,308.20 492,504.80 508,168.64 516,780.90
 
Total Income 924,429.75 1,101,459.93 1,260,358.03 1,401,321.69 1,672,822.94
Less: Income Tax (32%) 295,817.52 352,467.18 403,314.57 448,422.94 535,303.34
Net Income
  628,612.23 748,992.75 857,043.46 952,898.75 1,137,519.60
 

Table 22. Statement of Changes in Equity

 40

Light Touch Handmade Wood Crafts

Statement of Changes in Equity Projected Five Years
(Amounts in Philippine Peso)

Year 1 Year 2 Year 3 Year 4 Year 5

Partners' Capital
1,200,000.00 1,828,612.23 2,377.604.98 3,034,648.44 3,787,547.19
Beg.

Add: Net Income 628,612.23 748,992.75 857,043.46 952,898.75 1,137,519.60

Total 1,828,612.23 2,577.604.98 3,234,648.44 3,987,547.19 4,924,066.79

Less: Withdrawals
- 200,000.00 200,000.00 200,000.00 200,000.00

Partner's Capital
1,828,612.23 2,377,604.98 3,034,648.44 3,787,547.19 4,724,066.79
End.

The table 22 shows the assumption of the statement of owners' equity, the starting

capital is P 1,200,000, the company profit is P 628,612.23, the ending balance of owners'

equity is 1,828,612.23, as shown in the table. There will be no rise in drawing and no

decrease in net profit.

 41

Table 23. Statement of Financial Position (Balance Sheet)

Light Touch Handmade Wood Crafts

Statement of Financial Position
Projected Five Years
(Amounts in Philippine Peso)

Year 1 Year 2 Year 3 Year 4 Year 5

ASSETS
Current Assets
Cash 1,889,733.75 2,658.511.88 3,364,255.92 4,078,831.83 5,181,174.28
Tools & Supplies 69,476.00 71,560.28 73,707.09 75,918.30 78,195.85
Total Current Assets 1,959,209.75 2,730,072.16 3,437,963.01 4,154,750.13 5,259,370.13
Non-current Assets
Furniture and Fixtures 59,300.00 - - 59,300.00 -
Sales Equipment 84,000.00 - - - -
Technical Equipment 21,920.00 - - 21,920.00 -
Total Non-current Assets 165,220.00 - - 81,220.00 -
Total Assets 2,124,429.75 2,730,072.16 3,437,963.01 4,235,970.13 5,259,370.13

LIABILITIES AND
PARTNER'S EQUITY
Current Liabilities

Income Tax Payable 295,817.52 352,467.18 403,314.57 448,422.94 535,303.34

Total Current Liabilities 295,817.52 352,467.18 403,314.57 448,422.94 535,303.34

Partner's Capital End. 1,828,612.23 2,377,604.98 3,034,648.44 3,787,547.19 4,724,066.79

Total Liabilities and Partner's
2,124,429.75 2,730,072.16 3,437,963.01 4,235,970.13 5,259,370.13
Equity

Table 23 is the financial performance of Light Touch Woods Crafts that are

shown in the statement of financial position, which will show the stability of the business

and allow the proponents to see a snapshot of the business. In this table, the financial

position of the company will be shown for the last five years. It shows in the financial

results that the company is profitable with a total asset of P2, 124,429.75 in balanced with

the total liabilities and partner’s equity.

 42

Table 24. Statement of Cash Flows

Light Touch Handmade Wood Crafts

Statement of Cash Flow
Projected Five Years
(Amounts in Philippine Peso)

Year 1 Year 2 Year 3 Year 4 Year 5

Cash Flow from Operating Activities

Net Income 628,612.23 748,992.75 857,043.46 952,898.75 1,137,519.60

Add: Depreciation 9,382.00 9,382.00 9,382.00 9,382.00 9,382.00

Cash before working capital changes 637,994.23 758,374.75 866,425.46 962,280.75 1,146,901.60

Increase in Income Tax Payable 295,817.52 352,467.18 403,314.57 448,422.94 535,303.34

Net cash provided by operating

933,811.75 1,110,841.93 1,269,740.03 1,410,703.69 1,682,204.94
activities
Cash Flow from Investing Activities

Acquisition of Sales Equipment 84,000.00 - - - -

Acquisition of Technical Equipment 21,920.00 - - 21,920.00 -

Acquisition of Furniture and
59,300.00 - - 59,300.00 -
Fixtures

Net cash used for investing activities 165,220.00 - - 81,220.00 -

Cash Flow from Financing Activities

Investment 1,200,000.00 1,828,612.23 2,377.604.98 3,034,648.44 3,787,547.19

Withdrawals - (200,000.00) (200,000.00) (200,000.00) (200,000.00)

Net cash provided by financing

1,200,000.00 1,628,612.23 2,177,604.98 2,834,648.44 3,587,547.19
activities
Net increase cash during the year 1,968,591.75 2,739,454.16 3,447,345.01 4,164,132.13 5,269,752.13

Net Cash in Jan.1 78,858.00 80,942.28 83,089.00 85,301.13 88,577.85

Net Cash in Dec. 31 1,889,733.75 2,658.511.88 3,364,255.92 4,078,831.83 5,181,174.28

 43

Table 24 is the statement of cash flow that depicts the inflow and outflow of funds

in the business's operating, investing, and financing activities. Positive cash flow

indicates that a corporation is increasing its cash reserves, allowing it to reinvest in the

business, pay out money to partners, or pay down debt. As shown in the table, the

company has P1, 968,591.75 net increase in cash from its first month with a cash of P78,

858.00. This only means the company can reinvest, pay, and settle future debts.

Financial Analysis

Profitability Ratios

Table 25. Return on Sales

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Return on sales

Net income 628,612.23 748,992.75 857,043.46 952,898.75 1,137,519.60

Net Sales 3,835,331.81 4,065,451.71 4,309,378.82 4,567,941.55 4,842,018.04
0.16 0.18 0.20 0.21 0.23

Return on sales provides information as to the probability of Light Touch Wood

Crafts after deducting all expenses necessary to get sales. The given financial assumption

of sales shows an increase of 6% every year. The continuous increase of result shows a

positive sign for Light Touch Wood Crafts. This means that the business is profitable,

sustainable, and has the capacity to expand in the future.

 44

Table 26. Return on Equity

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Return on partner’s equity

Net income 628,612.23 748,992.75 857,043.46 952,898.75 1,137,519.60

Partner’s equity 1,828,612.23 2,377,604.98 3,034,648.44 3,787,547.19 4,724,066.79
0.34 0.32 0.28 0.25 0.24

Return on Partner’s Equity of the proposed business shows the measure of

profitability of partner’s investment.

Table 27. Return on Assets

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Return on assets

Net income 628,612.23 748,992.75 857,043.46 952,898.75 1,137,519.60

2,124,429.75 2,730,072.16 3,437,963.01 4,235,970.13 5,259,370.13

Total Assets
0.30 0.27 0.25 0.22 0.22

Light Touch Wood Crafts return on assets describes how well the resources are

utilized from production to generating income. The business is able to have an increasing

return of assets for the five-year operations.

Table 28. Debt Ratio

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Debt Ratio
Total Liabilities 295,817.52 352,467.18 403,314.57 448,422.94 535,303.34
Total Assets 2,124,429.75 2,730,072.16 3,437,963.01 4,235,970.13 5,259,370.13
0.14 0.13 0.12 0.11 0.10

Light Touch Wood Crafts debt ratio describes the capability of the business’

assets to meet all of its liabilities. Light Touch Wood Crafts maintained a low level of

liability with assets highly enough to cover all its liability.

 45

Table 29. Debt to Equity Ratio

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Debt to equity ratio

Total Liabilities 295,817.52 352,467.18 403,314.57 448,422.94 535,303.34

Total partner’s equity 1,828,612.23 2,377,604.98 3,034,648.44 3,787,547.19 4,724,066.79

0.16 0.15 0.13 0.12 0.11

Debt to Equity Ratio explains the capability of Light Touch Wood Crafts equity

to cover its liabilities. In the above data, the business maintained a very low level of

liability and therefore equity is enough to cover all its liability.

Table 30. Current Ratio

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Current Ratio

Current Assets 2,857,268.05 4,571,844.64 6,289,905.03 8,055,342.06 10,217,931.20

Current Liabilities 711,201.94 787,372.97 865,738.68 931,966.63 1,028,267.45
4.02 5.81 7.27 8.64 9.94

Current Ratio is significant to determine the liquidity of Light Touch Wood Crafts

and to meet its currently maturing obligations. The business maintained good level of

liquidity for five years, since the total current assets exceed the total current liabilities for

the five-year operation.

 46

Table 31. Payback Period

Capital Investment ₱ 1,200,000.00

Cash Inflows (Add back depreciation)

Year 1 628,612.23
Year 2 748,992.75
Year 3 857,043.46
Year 4 952,898.75
Year 5 1,137,519.60
Payback Period 1 Year

Payback period is the length of time needed to recover the cost of an investment.

Using the yearly income of Light Touch Wood Craft, but the depreciation expense is

added to properly reflect cash income, the investment of

₱ 1,200,000 is recoverable only in 1 year of the operation.

 47

Table 32. Break-Even Point Analysis

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Net Sales 4,930,070.40 5,225,874.62 5,539,427.10 5,871,792.73 6,224,100.29

Variable Cost 2,047,251.04 2,075,826.65 2,127,837.13 2,222,335.92 2,255,593.84

Contribution
on 2,882,819.36 3,150,047.97 3,411,589.97 3,649,456.81 3,968,506.45
Margin
Contribution
on 0.58 0.60 0.62 0.62 0.64
Margin

Break-even
Point (Peso)
Fixed Cost 544,064 523,944 531,798 574,636 560,983
Contribution
0.58 0.60 0.62 0.62 0.64
Margin Ratio
Break-even
315,557.12 314,366.40 329,714.76 356,274.32 359,029.12
Point (Peso)

Break-even
Point (Units)
Break-even
315,557.12 314,366.40 329,714.76 356,274.32 359,029.12
Point (Peso)
Selling Price ₱356 ₱356 ₱356 ₱356 ₱356
Break-even
886 883 926 1,001 1,009
Point (Units)
 48

Notes to Financial Statements

Schedule 1: Technical, Delivery, Furniture and Fixtures and Depreciation Expense

Technical Equipment
Total Cost 21,920

less: Salvage Value 10,970

Depreciable Amount 10,950

Divide: Usual Life 3 Years

Annual Depreciation 3,650

Delivery Equipment
Total Cost 84,000

less: Salvage Value 67,200

Depreciable Amount 16,800

Divide: Usual Life 5 Years

Annual Depreciation 3,360

Furniture and Fixture

Total Cost 59,300

less: Salvage Value 47,440

Depreciable Amount 11,860

Divide: Usual Life 5 Years

Annual Depreciation 2,372

 49

Depreciation Expense

Technical Equipment 3,650

Sales Equipment 3,360

Store Equipment 2,732

Total Depreciation Expense 9,382

Schedule 2: Income Tax Payable

Year 1 Year 2 Year 3 Year 4 Year 5

Total Income 2,222,506.05 2,460,540.53 2,705,433.36 2,912,395.71 3,213,335.77

Less: Income Tax (32%) 711,201.94 787,372.97 865,738.68 931,966.63 1,028,267.45

Net Income 1,511,304.11 1,673,167.56 1,839,694.68 1,980,429.08 2,185,068.32

Schedule 3: SSS, PhilHealth, HDMF, Employee Contribution

Monthly Cost
Position SSS Pag-IBIG PhilHealth Annual Cost

Manager ₱504.00 ₱224.00 ₱448.00 ₱1,176.00 ₱14,112.00

Craftsman 1,283.04 570.24 1,140.48 2,993.76 35,925.12

Deliveryman 427.68 190.08 380.16 997.92 11,975.04

Total 2,214.72 984.32 1,968.64 5,167.68 62,012.16

 50

Schedule 4: Sales
Weekly Monthly

Product Types Selling Price Unit Annual Sales

Sales Sales
Sales

House Decorations ₱399 60 ₱23,940 95,760.00 1,149,120.00

Small Wooden Coasters

₱ 160.50 48 ₱ 7,704 30,816.00 369,792.00

Wood Signs ₱ 580.30 42 ₱ 24,372.60 97,490.40 1,169,884.80

Racks ₱ 599 36 ₱ 25,158 100,632.00 1,207,584.00

Holiday Ornaments ₱ 199.20 72 ₱ 7,171.20 28,684.80 344,217.60

Utensils ₱ 199.50 42 ₱ 14,364 57,456.00 689,472.00

Total 300 ₱ 102,709.80 ₱ 410,839.20 4,930,070.40

Schedule 5: Cost of Production

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Direct
Materials ₱ 1,553,711.04 ₱1,600,322.37 ₱1,648,332.04 ₱ 1,697,782.00 ₱ 1,748,715.46

Direct Labor 342,144.00 342,144.00 342,144.00 361,152.00 361,152.00

Technical
21,920.00 - - 21,920.00 -
Equipment
Tools and
69,476.00 71,560.28 73,707.09 75,918.30 78,195.85
Supplies

Utilities 60,000.00 61,800.00 63,654.00 65,563.62 67,530.53

Total
Production ₱ 2,047,251.04 2,075,826.65 ₱ 2,127,837.13 ₱ 2,222,335.92 ₱2,255,593.84
Cost
 51

Schedule 6: Salaries and Wages

No. of
Job Position Monthly Cost Annual Cost
Employees

Manager (Indirect Cost) 1 ₱ 11,200 ₱ 134,400

Craftsman (Direct Cost) 3 ₱ 28,512 ₱ 342,144

Delivery Man (Indirect Cost) 1 ₱ 9,504 ₱ 114,048

Total Cost ₱ 49,216 ₱ 590,592

Schedule 7: Fuel Expense

Total Costing
Name Source
Monthly Annual
Fuel/Gas Gasoline Station ₱ 2,000.00 ₱ 24,000.00

Schedule 8: 13th Month Pay

Position Annual Cost

Manager ₱ 11,155.20

Craftsman 28,397.88

Deliveryman 9,465.96

Total ₱49,019.04
 CHAPTER 6

SOCIO-ECONOMIC ASPECT

The proposed business aims to help to provide jobs and to supply an affordable

product to the Filipino people. In this modern world, people must engage with business

that would contribute to the socio-economic development of the country.

This chapter discusses the different factors of economy that can definitely gain

benefit if Light Touch Wood Craft is put up and opened in the market. This includes the

benefits and significance transported to each particular sectors of the economy such as

customers, community, environment, employment, and government. This shows the

purpose of the business and proves that its existence is not solely on gaining profits, but

to also emphasize the contributions that the proposed business can share to the economy,

government, and community of the Philippine country.

Customers

Light Touch Wood Crafts will offer affordable, safe, quality-based products and

services that would bring satisfaction to the customers of the business. The availability of

the business is six days a week and on Sundays they can still order on the store’s online

platform, for it is available anytime for the customers to use at their convenient time. The

proposed business will challenge the creativity and imaginations of the customers in

terms of their desired designs and decorations for their homes and/or as accessories.
 53

Community

Light Touch Wood Crafts will generate opportunities and offer employment and

income to the community of Davao City. The number of unemployed persons will

decrease because of the offered position of the business that will help them be more

productive. The creativity of Filipino citizens will be cultivated and enhanced because of

the flexibility of the business in dealing with the desires of the community.

Environment

The ecological regulation is one of the most significant factors to be adhered upon

by the Light Touch Wood Crafts. A clean environment and effective environment

protection will be facilitated to have a good business operation. The proper waste

disposal of the garbage and other environmental aspects will be given attention, and

proper execution of the environment regulations will be followed and conducted strictly.

The excess parts of the woods will be segregated and recycled to produce another piece

of craft to avoid wasting the woods. The business will conduct trainings and seminars to

employees to prevent problems arising regarding environmental problems or issues.

Moreover, Light Touch Wood Craft is wholeheartedly positive and willing in preserving

and helping in sustaining the health of the environment.

Employment

Light Touch Wood Crafts will open its recruitment for qualified employees and

provide opportunities for them, especially in Poblacion 20-B, Davao City. The persons

with qualified job qualifications and who are fully aware, understand, and are flexible

with the given job specifications are hired. Since the business is still starting, the numbers

of people that will be hired are limited. However, as the business grows, it will help the
 54

economy by lessening the number of unemployed people.

Government

Light Touch Wood Crafts would efficiently give full support and help the

government in the form of paying taxes and comply other government requirements

and/or contributions. The tax payment from Light Touch Wood Crafts will help the

government in upcoming projects and improvements in the financial aspect. This will be

beneficial for the people, such as repairs and maintenance of public infrastructures, public

facilities, and other activities that will provide good living, safety, and security.
 55

REFERENCES

Kim, S. (2017). Image support and wood identification of wood crafts (ii) – focusing

on wooden

sculpts.

Green, H.

(2007). W ood:

craft, culture,

history. Penguin.

Appendix A.
 56

Permission Letter to Conduct Study

Appendix B. Survey Questionnaire

57
 58

Appendix C. Certificate of Grammarian

CERTIFICTE OF GRAMMARIAN

This is to certify that Cheena S. Liloc and Iris Claire D. Nacasabog, student

researchers of the College of Business Education have submitted this feasibility study

titled, “LIGHT TOUCH WOOD CRAFT” and this manuscript has been grammatically

checked and corrected.

Certified this 13th day of June 2022 at Jose Maria College Foundation, Inc.

Philippine-Japan Friendship Highway, Sasa, Davao City.

PRINCESS MONIC K. DABASOL, LPT

Grammarian
 59

Appendix D. Photos

Figure 1. Survey Questionnaire Responses

Figure 2. Screenshot of Final Defense (Google Meet)

JOSE MARIA COLLEGE

FOUNDATION, Inc.
 60

Philippine Japan Friendship Highway

Sasa, Davao City

Curriculum Vitae
IRIS CLAIRE D. NACASABOG
Address: Purok 2 Ariola Street, West Poblacion,
Kalilangan, Bukidnon 8718
Email Address: iris.nacasabog@jmc.edu.ph

PERSONAL INFORMATION

Date of Birth :  May 24, 2000

Place of Birth :  Kalilangan, Bukidnon

Sex :  Female

Height :  5’4”

Weight :  60 kgs.

Civil Status :  Single

Citizenship :  Filipino

EDUCATIONAL BACKGROUND

TERTIARY : JOSE MARIA COLLEGE

Bachelor of Science in Business Administration
Major in Financial Management
Philippine Japan Friendship Highway,
Sasa, Davao City
2019-ongoing

SECONDARY : LICEO DE CAGAYAN UNIVERSITY

ABM (Accountancy, Business and Management
Strand)
 61

R.N.P Boulevard, Cagayan de Oro City

2017-2019

KALILANGAN NATIONAL HIGH SCHOOL

Ninoy Aquino, Kalilangan, Bukidnon
2013-2017

PRIMARY : KALILANGAN BAPTIST CHRISTIAN ACADEMY

Purok 3 Lantong Street, West Poblacion,
Kalilangan, Bukidnon
2007-2013

WORK EXPERIENCE        :           

 On-the-Job Training
Shopwise | Cagayan de Oro City
January 2019 – March 2019
 Cashier
Jonnas Bakeshop | Cagayan de Oro City
June 2022 – August 2022

SEMINARS AND TRAININGS ATTENDED:

 EduTrends: “The Role of Personality Development in your Career
Cryptocurrency: Is Financial Technology Ready for Change?”
Jose Maria College Foundation, Inc. | Davao City
January 27, 2021
 DTI Webinar: Consumer Education
Jose Maria College Foundation, Inc. | Davao City
November 04, 2022
 JCFAP Finance Leaders’ Conference 2022: “Achieving Success through
Sustainability Leadership"
Zoom Meetings
November 20, 2022

JOSE MARIA COLLEGE

FOUNDATION, Inc.
 62

Philippine Japan Friendship Highway

Sasa, Davao City

Curriculum Vitae
CHEENA S. LILOC
Address: Block 6 Lot 7, Pizarro Village, Panacan,
Davao City, Davao del Sur 8000
Email Address: cheena.liloc@jmc.edu.ph

PERSONAL INFORMATION

Date of Birth :  April 04, 2001

Place of Birth :  Panacan, Davao City

Sex :  Female

Height :  5’2”

Weight :  47 kgs.

Civil Status :  Single

Citizenship :  Filipino

EDUCATIONAL BACKGROUND

TERTIARY : JOSE MARIA COLLEGE

Bachelor of Science in Business Administration
Major in Financial Management
Philippine Japan Friendship Highway,
Sasa, Davao City
2019-ongoing

SECONDARY : JOSE MARIA COLLEGE

ABM (Accountancy, Business and Management
Strand)
 63

Philippine Japan Friendship Highway,

Sasa, Davao City
2017-2019

F. BANGOY NATIONAL HIGH SCHOOL

Km. 9, Sasa, Davao City

2013-2017

PRIMARY : ARMED FORCES OF THE PHILIPPINES

LOGISTICS COMMAND ELEMENTARY
SCHOOL
Command Elementary School

Kilometer 14, Camp Panacan, Davao City

2007-2013

WORK EXPERIENCE        :           

 IQOR COMPANY SITE 2

Walmart Account
Billing/ Chat Support Representative
July 13, 2023 – Present
 JOLLIBEE AIRPORT BRANCH
Service Crew
2020 – 2021