Researchers:

Ancel G. Celajes
Mark Arvin N. Romero
Ben Jay F. Herran
Ma. Lichelle A. Figuracion
Daniel O. Toralba Jr.

Nora D. Ramos
Adviser

EXECUTIVE SUMMARY
Utilization of Scrap Vegetable in the Production of Crayons in the
Province of Rizal
Threading the long stretch of 2024 kilometers of Southern Luzon
sits

Rizal

Province;

the

regions

provider

academically

and

environmentally inclined entrepreneurs. With its fine atmospheric milieu,

the province vegetation industry produced and generated 10% increase in
its continuing production thus, setting Rizal Province in the core of
bountiful modernized agriculture.
Discovering the province richness in soil area, vegetables become
the limelight commercialization. Talong (eggplant) and Patola (sponge
gourd), Okra, Kamatis and Malunggay are some of commonly harvested
veggies at the backyard of every household. With this, an access for dine
food in every house table can be experienced.
The public market as the main access of every Rizaleos consumer
is the perfect niche for the harvested veggies to be sold in an instant.
However, due to long soil boundary, an excess production of veggies
becomes a perennial dilemma of every merchant. Talong and Patola
among other veggies are categorized by the vendors as the most
unconsumed products in the market because they are rotten easily.
Through this context, the researchers eagerness to find new truths,
come up the idea of rediscovering and restructuring the rotten veggies to

become a high-calibre market product. Thus, careful and scientific study

by them resulted in the discovery of edible phosphoric oil coming from
Talong and Patola extract. The chemical property of both veggies
contains a phosporous substance, which make the texture of the crayon
glossier and smoother whenever combined. With these new findings, an
economical oil has come to rise to replace the expensive whale oil
commonly used by commercial producers.
With this unique discovery, the researchers opted to improve the
trend of crayon production thus, giving birth to the business-venture
KAPITAN KULAY. This establishment will start a capital of
Php300,000 which will derive from the University fund and personal
money of the researchers.
Production of Kapitan Kulay is not only a profit-oriented upshot
but also an environmental friendly invention because of its safe and
smaller amount of toxic content. Crayons will be made of 50% wax, 40%
talong and patola extract and 10% sampaguita aroma. Through this, eight
cylindrical sticks of crayons measuring three inches long, will be made,
thus, each box will cost eight pesos (Php 8.00).
With all the innovativeness, Rizal Province will bring to life the
once rotten now golden and smooth crayons ready to color every users
life.

CHAPTER I

INTRODUCTION

Crayon is one of the most renowned coloring materials of all time.

By using a crayon, it simply gives the existence and life to any art works
and sometimes it brings joy to a person who uses it, especially the kids.
Crayon as what Americana Encyclopedia defines is a stick of chalk, wax
or a combination of wax and clay used for drawing and marking;
pigments are added to these materials for color. Chalk crayons, often
called pastels, have been used by many artists because they produce
softer tones than oils and water color. They are made by mixing a chalk,
coloring agents and water, grind into a paste that is then dried. But
nowadays wax crayon is commonly produced because of its fast and easy
production. And aside from this, there are also some materials which can
possibly be changed into crayon, like for example, the soy beans.
Non-toxic crayons are the most preferred by the consumers of
today because the common users are the children and toddlers who are
not yet cautious and may accidentally eat the crayon and may possibly be
the cause of their sickness or even death. With this reason, some
companies are continuously developing more non-toxic crayons. Among
the newest type of crayon is the wash off crayon composed of materials

that are similar to those of the wax crayons. Some of these companies
produce special type of crayon which is made from soap, wax, resins and
limp blast and is used in drawing on stones or plate for reproduction in
lithography. Crayons are manufactured in various shapes, such as round,
hexagonal or square and in different sizes. The most common shape
however, is cylindrical.
Being toxic is not just the only problem of todays commercial
crayons but also the texture of the color on the paper surface which can
be seen roughly. Some artists used some techniques to eradicate the
problem by scratching it with the edge of a ruler or any material that can
be used to make it glossy and smooth and other way, is by applying oil on
the art work surface. Another problem of todays crayola is that, it can
break easily when it is hold tightly by the children.
But crayons are nowadays continuously being developed to make
solutions to the said problems. Crayons now can be produced through
substitute raw materials and some additives to make it more convenient to
use, and one of the raw materials used by the researchers in order to
produce a more non-toxic, more glossy and more durable crayons are
vegetables like patola (sponge gourd) and talong (eggplant). Patola
and Talong in Filipino term are possesses an edible oil which contains
phosphorous which can make paper surface smooth and glossy.

Patola is one of the favorite vegetables here in the Philippines and be

used as an ingredient in some Filipino delicacies like miswa patola.
While on the other hand, talong or solanum nilongra is a widely
cultivated herb of the potato or nightshade family (solanaceae) and is of
large, glossy usually purple fruit and is commonly one of the favorite
vegetables of the Filipinos. This kind of vegetable contains phosphorus
that gives glossiness in the crayon.
The property of talong and patola really helped the crayon more
improved, glossier and more durable as what a laboratory and chemical
analysis show. (Other information: Americana Encyclopedia Google.)

CHAPTER II

MARKETING

Marketing is a system concerned with the planning and

development of products and services, determination of prices, creation
of promotional programs and distribution system to present and
prospective market for satisfaction of their existing needs, and wants, thus
maximizing profit in the long run.
It aims to identify a market where a potential exist for profitable
business, and to take the necessary steps to satisfy the market by careful
planning of the marketing mix, or the five Ps: product or service,
price, place, people, and promotion.

A. Product
This project is focused on the production of crayon through the use
of vegetables such as eggplant and sponge gourd. In the province of
Rizal, patola and talong can be found anywhere and its easy to plant such
kind of vegetable. It catches the attention of the researchers because
talong and patola rots easily, thats why the researchers think on how it
will be utilized instead of being thrown and became waste. The extract of
said vegetables will be part of the main component of the product. While

the pulp of it can be converted into an organic paper in just one way
process; the researchers will probably produce two (2) products.
Some manufacturers said that the crayons they are producing are
non toxic but the consumers didnt know what true behind the products
are. Through this product the mind of those people will rectify by
knowing that a crayon can be possibly made using scrap vegetables.
Instead of throwing it away it can be use can be utilized in another
commodity. This crayon has less chemical content because it is compose
of 50% paraffin wax, 40% extract from patola and talong and 10%
sampaguita aroma. While some other commercial crayons have more
chemical which is a big menace in the heart of child, because children are
the major users of crayons. The researchers were concerned to their
customers, not only to them but also to the economy. This time we have a
sluggish economy, we have to conserve our nature by recycling some
waste products which can be transformed and used as new product will be
able to contribute for the development of our economy.

B. Target Market
Many factors are considered before the proponents came up with
the succeeding decisions. The proponents came up with the scope, which
will be included in the business operation. They decided to distribute it
within the province of Rizal. This is in lieu with the idea that,

right product in the right geographic area at the right time. Localizing
the kind of product and sales effort including the sales promotion will
post the major advantage with respect to geographic segmentation as
adhered upon by the chosen market-coverage strategy.
Target markets are the buyers of the goods. They can be the present
product users or they can be the prospective buyers being the target of
marketing organizations.
Market shall not mean palengke but people with needs to
satisfy capacity or money to spend and willingness to buy.

Area Coverage:
Agriculture is a giant industry of Rizal. As a matter of fact, its
major income depends on the Provinces agricultural sector, which is
60%, included in 60% is the farming industry which yields the rich soil of
Rizal. Palay serves as the number one (1) among the list of the most
harvested plant in the Province. Aside from palay, some vegetables were
also included such as talong, patola, upo, okra, and other backyard
veggies. Corn and pineapple were also harvested there.
Like what is mentioned, patola and talong were included in the list,
it is the pinpoint of the researchers in setting Rizal as the no. 1 source of
the raw materials. Being abundant is the reason why these veggies can be

ignored and vested daily. The researchers would like to utilize them in a
way of producing crayon.
In utilizing these scraps, the researchers believed that it will make
Rizal the first producer of organic crayons which are non-toxic. This is in
lieu with the idea that, right product in the right geographic area at the
right time.

Customers:
Target customers will be the preschoolers and grade school
students and those in the secondary level of education. The researchers
projected eight percent (8%) of their prospective customers were in grade
school, five percent (5%) and three percent (3%) will be preschoolers and
high school students, respectively. The projected rates for target
customers were based from the enrolment report in the Department of
Education (Rizal and Antipolo Districts) as of August 8, 2008.

Computation for the Target Market per Head

Preschool
Grade School
High School
Total/TM* per Head
*TM - Target Market

Public Private
7,502
1,876
283,610 84,439
134,978 53,991
426,090 140,306

Total
9,378
368,049
188,969
566,396

Grand
Rate
Total
5%
469
8%
29,444
3%
5,669
35,582

Computation for the Increase Rate in Production

Preschool
Grade School
High School
Total/TM per
Head

Increase
Grand Increase in
Public
Private Total
Rate Total
Rate
TM per
Head
7,502
1,876
9,378
5%
469
102%
478
283,610 84,439 368,049
8% 29,444
102% 30,033
134,978 53,991 188,969
3%
5,669
104%
5,896
426,090 140,306 566,396

35,582

Computation for the Average Market Share

Target Market Share per Head
Divide: Total population of students

35,582
566,396

Average Market Share

6.3 %

C. Demand and Supply Analysis

Demand and supply is considered as one factor in distributing or
allocating product. In this analysis, see the market how they patronize the
production will depend on the demand of the consumers.
Based on the survey conducted by the researchers last September
10, 2008 the main users of crayons are ranging from nursery to grade 3
students while those who are in the grade 4 to grade 6 are now using
water colors. Out of 100 respondents, there were 68 persons who are
currently using crayons; it means that crayon is considered as the most

36,407

accessible coloring material. Refer to the table below about the result on
the said survey:

Table 2.1
Users of Different Coloring Materials
Coloring

Grade
Nursery

High

Kindergarten

materials

Total
school

school

Crayons

16

21

20

11

68

Oil pastel

None

11

Total

25

25

25

25

100

Water
color
Color
pencil
Poster
color

Table 2.2
Average Growth Rate in the Population of Students

2008

Average

Annual

Growth Rate

Growth

Projected
Population as
of 2009

Preschool

6,263

2%

125.26

6,388

Grade school

192,908

2%

3,858.16

199,766

High school

94,748

4%

3,789.92

98,538

Total

293,919

7,773.34

304,692

The average growth rate of preschool and grade school is 2% and

4% in high school by the year 2009. See the computations below for the
average growth year per educational level.

Supporting Details:
Average growth rate of preschool and grade school is computed as
follows:
Preschool and Grade School :
Private

1%

Public
Total Percentage

3%
4%

Divide by: Number of School type

Average Growth Rate

2%

Average growth rate of high school is computed as follows:

High School:

Private

3%

Public

5%

Total Percentage

8%

Divide by: Number of School type

Average Growth Rate

4%

Present Competitors:
According to the information gathered by the researchers, the most
dominant crayon-producing company in Rizal as well as here in the
Philippines is Amspec Corporation- the makers of crayola- with the total
market share of forty percent (40%). Included in the list of existing
competitors are CE Corporation (Joy Crayon), Venus Commercial
(Corola Crayon), Joaquin Commercial (JC Crayon), Lehao Corporation-a
China based Corporation- (Lehao Crayon), Sunrise Corporation (Kiddy
Crayon) and some small makers of crayons. Kapitan Kulay opts to get the
6.3% of the unsatisfied portion of the total market share.

Below are the pie charts showing the distribution of shares in the
total market share;
Figure 2.1

Projected Market Shares of Competitors

40%

40%

Crayola - Amspec
Corporation
Joy Crayon - CE
Corporation
Unsatisfied Customers

20%

Distribution of rates for each corporation sharing in the unsatisfied

portion of the total market share is as follows:

JC Crayon
Joaquin
Commercia
l
Projected
Market
Share
Multiply:
Unsatisfied
Customers'
rate
Share in
the Total
Market
Share

Corola
Crayon

Kiddy Crayon

Lehao
Crayon

Kapitan
Kulay

Venus
Commercial

Sunrise
Corporation

Lehao
Corporation

URSBBICIDYE

Others

7.10%

8.75%

8.32%

8.20%

6.30%

1.33%

20%

20%

20%

20%

20%

20%

1.4200%

1.7500%

1.6640%

Figure 2.1.1

1.6400%

1.2600%

0.2660%

The above graphical presentation shows the market share of

Kapitan Kulay in the unsatisfied customers portion of the total market
share of the competitors.

D. Projected Production
The product will be produced four (4) times in a month. Per
production, the output will be 1875 boxes containing 8 sticks per box.
250 kilos of paraffin wax will be utilized in the monthly production.
Below is the supporting computation of the projected production in
5 years.
Boxes per production
Multiply: No. of production in a month
Total Production per month
Multiply: No. of production a year
Projected Annual Production

1,875
4
7,500
6
45,000

Table 2.3
Projected Annual Production
Year

Annual Production

2009
2010
2011
2012
2013

45,000
46,035
47,094
48,177
49,285

E. Projected Sales
The projected sales of Kapitan Kulay will be based on the
projected annual production (see Table 2.3). The mark-up of the product
price, one peso and seventy centavos (Php1.70), is the difference between
the stated price per box, which is eight pesos (Php8.00), and the
production cost per box that is six pesos and thirty centavos (Php6.30).
The mark-up rate per box is 26.98% which represents the gross income
per box of Kapitan Kulay.
Table 2.4
Projected Annual Sales
Annual Production
Multiply: Cost per Box
Projected Annual Sales

2009
45000
8
360000

2010
46035
8
368280

2011
47094
8
376752

2012
48177
8
385416

2013
49285
8
394280

F. Marketing Strategies
This part of research serves as the game plan of the business to
attain its predetermined objectives. It is defined as the marketing logic
where businesses hope to achieve its marketing objectives. This part
contains the specific strategies for the target market, the marketing mix
(pricing, place, people, product and promotion) and also marketing

budget that contains the computation for the beginning expenses of the
business.

Practices of Competitors
Nowadays, people are so idealistic about business aspects. Some
products produced are commonly under food and service category. There
are many business establishments that mostly produce product that are
non-food, most improved and hi-tech (from high technology product).
Ordinarily, one of the products produced are crayons which are mostly
seen in bookstores nationwide. Tarpaulins and flyers are used to promote
their products. In spite of the circumstances, some competitors still exist
in the market to compete with products that also appear in the same
bookstore. The products of the two competing business are the same in
nature but has different characteristics and appearance.

Own Marketing Strategies

It contains specific marketing strategies used by the researchers to
be applied in their projected business; this includes marketing expenses
and promotion.
Finding-out possible resources of the raw materials for the
product which can be produced in such enough prices, and

making them the suppliers, because the resources of the

researchers products are very limited.
Computation for the expenses incurred by the business
during the time of production and commercialization of the
product.
Issuance and posting of commercials using tarpaulins,
pamphlets and brochures for the positioning of the business
in the market place.
Giving papers made from extracted tissues of sponge gourd
and eggplant as freebies for the future agents or retailers who
brought the product.

G. Marketing Expenses
The expenses incurred by the project are cheaper due to the
accessibility of the materials in the production site. Eggplant and sponge
gourd can be found anywhere and has a lower commercial value because
our country is one of the exporters of sponge gourd and eggplant.
Aside from the expenses in buying the main ingredients, there
should be expenses for transportation. Electricity expenses are also
included on the said product. It must include also the wages that will be
given to the three (3) workers. The other miscellaneous expenses are
yielded for the development of the product such as secondary ingredients.

H. Production Cost
In order to come up into a proper pricing, the proponents consider
the cost incurred in producing the veggie crayon.
Below are the following data in the production cost:
Direct Materials

3.98

Cost of material per production

Total output per production

6,844
1,875

Packaging Cost per Box

Direct Labor

0.32

(Wages per Production / 3 workers)

Total Output
200 x 3
1875
Price per Box

6.30

CHAPTER III

Production / Operation Plan

Production study provides knowledge on the equipment, the

output, and its capacity in production that will cater the needs of the
customer. It also illustrates the technical aspect that covers the acquisition

and the listing of the materials, equipment and other considerations

needed in the operation of the business.

A. Technical Product Description

Technicalities made the product more successful and even a highquality product. Perfect planning with perfect ideas will result to a
perfect product.
The proponents are able to develop a new product which will
benefit most of the people to whom the product is intended for. The
production is concerned with the utilization and potentiality of talong
(eggplant) and patola (sponge gourd) as additives and at the same time as
components of a more non-toxic crayon. Effective packaging of this oneof-a-kind vegetable-made crayon needs a lot of planning and how it will
work.
Eggplant, paraffin wax, sponge gourd and some coloring pigments
are the main components while the secondary are sampaguita essence.

B. Steps
Crayon can be easily made as long as the raw materials and
equipments to be used are available. It must also be included that the
space is enough to make the production faster with fewer work forces.
Here are the steps showing the production of Vegetable Crayon:

Stage 1 - Extracting
1. Collection of scrap vegetables
2. Drying
3. Manual Extraction
4. Filtration
5. Extract
Stage 2 Making Crayons
1. Heating of Wax
2. Mixing of coloring pigment, scent and extract
3. Molding
4. Cutting
5. Collating
6. Packaging
C. Monthly Schedule
Effective production must entail not only the product itself but also
the time frame and the number of products that will be produced within a
certain period of time or in one way, how long the production will be.
The production of the veggie crayon can be allotted into eight (8)
hours per production, four productions a month.
With this schedule of production, ideal output of the business is
expected.

D. Labor
Labor is the most important factor of production, whereas, it
involves people who work on with the product.
The business will need three (3) workers in the production of the
veggie crayon. They will work on what the schedule referred to. Each
worker will receive a minimum salary of two hundred pesos (200) per
production and eight hundred pesos a month. The business will not apply
the minimum wage law for the reason that Rizal Province is a rural area.
If the income will increase by the following years, there will also be an
increase in the salaries of the workers.

E. Machinery/ Equipment Requirement

In order to produce more products that the production aimed for, a
decent and appropriate machineries and equipment are required.
Production needs molder, which is made from aluminium, plastic
or rubber to mold crayons smoothly. Charcoal stove and charcoal are also
needed for the preparations and dissolving the mixture. Two (2) shallow
kettles are used in mixing the ingredients, and through the help of stirring

materials. Grinding materials must also be included such as high-powered

blender but it is optional, because grinding can also be done manually.
The product is not expensive in terms of machineries and
equipment because of the improvised materials that can be possibly used.

F. Raw Materials
In the production of veggie crayons the following materials were
used:
1. Eggplant and sponge gourd extract
2. Sampaguita scent
3. Colouring pigments ( dye)
4. Paraffin wax
Accessibility of the raw materials is a major consideration made by
the researchers. Paraffin wax and other materials are available in the
public market. While the eggplant and sponge gourd can be found
anywhere here in Rizal, especially those who have backyard garden.

G. Plant Location
The main production of the veggie crayon will be made in the
Business Incubation Center and Innovation and Development for Youth
Entrepreneurs (BICIDYE) of the University of Rizal System Binangonan
Campus.

Chapter IV

Organizational Structure

Management is the art of science of planning, organizing, directing,

controlling and staffing in order to achieve organizational goals. Involve
in each of these managerial function is the structural factors, oftentimes
remembered as five Ms: men material, machines, method and money.

It is essential in the business world because every human

organization requires effective management in order to achieve its
objective. Furthermore, every person related to the business must know
and follow the principles of organization and management.
Success or failure of every business organization depends in its
management with an organization; achievement is possible through
proper planning, organizing, leading or directing, and controlling the
effort performed by the members.

A. Legal Form of the Business

University of Rizal System, Binangonan is a pioneer school for
Business and Commerce which tend to make the students more businessminded, more creative and more innovative individuals. And in
connection with its mission and vision, URSB established an organization
which can really help the students develop their skills and talents in the
field of research and production. The organization is known as the
URSB- Business Innovation Center for Incubation and Development for
Youth Entrepreneurs (BICIDYE).
BICIDYE is an organization intended for promoting and realizing
products with high market potential that are originally proposed and
produced by its students. It serves as the Universitys research, production
and extension arm that lend services to the community.

B. Organizational Structure
The organization can be classified as functional type of business
organization wherein works are divided according to the functional needs.
It applies the principle of division of labor. The labor is divided based
on their area of specialization. Each labor is assigned to a certain field to
be able to produce quality product.
Every major decision regarding the operation of the business will
follow a certain channel of approval, first from the production team to the
BICIDYE then to the Dean followed by Chancellor and lastly, to the
President.
Production team is concerned with the production of the veggie
crayon. They need to manipulate the place, time, quality, quantity and for
the productivity of any other output including the paper made from the
pulp of the vegetables used.
The marketing is assigned to the promotion and selling activities.
They were concerned about the customer of the product, consistency of
market share and formulation of efficient channels of distribution. The
proponents preferred to use a single- levelled channel of distribution from
manufacturer to retailer then to consumers.

On the other hand, financial tem is concerned with the management

of monetary affairs of the business; they are focused on all financial
aspects such as budgeting and expending the firms finances.

C. Qualification of Officers
The University will choose and designate those people who will be
qualified for the aforementioned field. They will be chosen according to
their knowledge on the position listed on the preceding chapters.
URSB-personnel, who have considerable knowledge about the
management/production of the business efficiently and effectively, will
hold the position of the management.
A professor, who has a solid background about the marketing
aspects, will be designated to manage the marketing teams function.
A CPA-Professor, who has a solid experience in dealing with the
pressure of finance, will head the Finance Department.
Workers should be bonifide students of the University and are duly
certified as those who belong to the indigent families of the community.
D. Office Equipment
The business will be using one (1) computer set that will be
essential for the document processing and also for the communication
processes. There are some furniture and fixtures such as tables and chair

E. Administrative Expenses
There will be no administrative expenses because those instructors
composing different teams gave their time and expertise through their
professions. In this venture without any pecuniary considerations, just
respect and gratitude in accordance with the memo, they signed stated
that no additional compensation for their designation. They will only
do this for the sake of the University.

F. Schedule of Activities
This schedule of activities shows the pre-operating activities of the
business and the specified time each activity should be accomplished.
The purpose of this is for the proponents to choose what right kind in
order to complete the activities on the time. This is also to help them to
realize if they are doing in accordance with the plan.

Table 4.1
Schedule of Pre-operating Activities

Activities
Conducting Research and Finding

Months
September October

Feasible Location
Raising of Funds

November

Purchasing Activity:
Equipment
Materials
Finding of Potential Workers
Training of the Workers
Start of the Normal Operation

December

December
December
January

G. Waste Disposal System

The production of veggie crayon is not totally hazardous to the
environment because almost all of the components come from organic
materials such as the vegetables. The left-over pulp of the vegetables will
be used for another product, which is the organic paper. On the other
hand, unused paraffin wax can be reused because wax can be recycled
and used in production over and over.

GANTT CHART
Months
Activities
September
Conducting Research and Finding Feasible Location
Raising of Funds
Purchasing Activity:
Equipment
Materials
Finding of Potential Workers
Training of the Workers
Start of the Normal Operation

October

November

December

January

Figure 4
ORGANIZATIONAL STRUCTURE

PRESIDENT

CHANCELLOR

DEAN

BICIDYE

RESEARCHERS

Financial Team

Marketing Team

Production Team

CHAPTER V

FINANCIAL PLAN

Financial reports and statements are essential part of every business

venture. It shows different financial aspects such as if the business gains
income within a certain period (income statement). It also indicates the
current position of the business assets (balance sheet).

A. Projected Income Statement

Year
Annual Sales
Less: Cost of Goods
Manufactured and sold
Gross Profit
Less: Operating Expenses
Wages Expense
Utilities Expense
Office Supplies Expense
Depreciation Expense:
Computer
Depreciation Expense:
Furniture and Fixture
Bad Debts Expense
Advertising Expense
Miscellaneous Expense
Net Income

2009
360,000

2010
368,280

2011
376,752

2012
385,416

2013
394,280

283,500

288,849

294,303

299,860

305,525

76,500

79,431

82,449

85,556

88,755

14,400
10,000
1,500
750

14,400
10,500
1,500
750

14,400
11,000
1,500
750

14,400
11,500
1,500
750

14,400
12,000
4,500
1,500

50

50

50

50

150

1,656
8,000
1,000
39,144

1,600

1,700

1,400

1,720

1,000
49,631

1,000
52,049

1,000
54,956

1,000
53,485

B. PROJECTED BALANCE SHEETS

2009

2010

2011

2012

2013

Assets:
Cash

243,144

295,175

333,324

402,980

417,135

Accounts Receivables

84,456

80,000

85,000

70,000

86,000

1,656

1,600

1,700

1,400

1,720

Office Supplies

1,500

1,500

1,500

1,500

4,500

Computer

15,000

15,000

15,000

15,000

30,000

750

750

750

750

1,500

2,500

2,500

2,500

2,500

7,500

50

50

50

50

150

344,144

391,775

434,824

489,780

541,765

5,000

3,000

4,000

4,000

2,500

Less: Allowance for Bad Debts

Less: Accumulated DepreciationComputer

Furniture and Fixtures
Less: Accumulated DepreciationFurniture and Fixtures
Total Assets

Liabilities and Capital:

Liabilities:
Accounts Payables

(10,000
)

Drawings

339,144

388,775

440,824

485,780

539,265

344,144

391,775

434,824

489,780

541,765

Capital

Total Liabilities and Capital

Auxiliary Data:
Cost of Goods Manufactured and Sold
2009

2010

2011

2012

2013

Direct Materials
Add: Packaging
Total Material Cost
Add: Direct Labor
Cost of Goods

179,100
90,000
269,100
14,400

183,219
90,900
274,119
14,731

187,433
91,800
279,233
15,070

191,743
92,700
284,443
15,417

196,153
93,600
289,753
15,772

283,500

288,849

294,303

299,860

305,525

2009

2010

2011

2012

2013

Capital Beginning

300,000

339,144

388,775

430,824

485,780

Add: Net Income

39,144

49,631

52,049

54,956

53,485

339,144

388,775

440,824

485,780

539,265

485,780

539,265

Manufactured and Sold

Capital Statement

Total
Less: Drawings
Capital End

10,000
339,144

388,775

2009

2010

430,824

Packaging

Annual Package Cost

90000

Multiply: packaging
Total Package Cost

90000

2011

2012

2013

90000

90900

91800

92700

900

900

900

900

90900

91800

92700

93600

Financial Ratio Analysis

(Profitability Indices)
The following computations were presented not in tabular format
which is by every year but instead it was presented with just a single year

which serves as the researchers base year; year 2009 is the base year
because 2008 is a fiscal year.
Here are the following computations:
Return on Investment (2009)
ROI = Net Income / Average Total Asset
= 39,144 / 344,144
= 0.11
Return on Investment (ROI) measures the overall efficiency of the
firm in the management of the assets and in generating profit.

Payback Period (2009)

PbP = Initial Investment / Annual Cash Return
= 300000 / 300000
= 1.0
The business only needs one (1) year to recover all cash outflows
used in the operation.

Net Profit Margin (2009)

NPM = Net Income / Net Sales
= 39,144 / 360000
= 0.1

Net Profit Margin shows how much part of the net sales was
recognized as net income. Net income is the pure profit of the business
after deducting all the operating expenses incurred.

Cash Flow Margin (2009)

CFM = Cash flow from the Operational Activities / Net Sales
= 300000 / 360000
= 0.83
The rate shows the availability of cash for future operations of the
business.

CHAPTER VI

Business Assumptions

In conducting research before establishing business, assumptions

will be a great journal of records, which will help the proponents in
decision-making particularly in the financial aspect.
The following are the assumptions made by the researchers:
1. Kapitan Kulay will use the calendar period in presenting its
financial records.
2. The amount reflected in each computations are rounded to the
nearest peso/ones in order to have a conformity in its records
and also the target market is per head.
3. The annual production will increase annually by 2.3%.
4. Cost per box of crayon will be at fixed price for the first five (5)
years of operation.
5. Market share of Kapitan Kulay will be based on the average
share per head to the total population of students (public and
private) from Preschool to Secondary Level in the Province of
Rizal.
6. The growth rate for the enrolment of preschool and grade
school, both public and private, will be at 2%; while 4% is the
rate for high school.
7. Wages for workers will be at fixed amount of 200 per
production.
8. Sales of Kapitan Kulay will increase by 2.3% annually.

9. Direct materials cost is assumed to increase by 2.3% annually

because of the unstable economic status of the country.
10. As the direct material cost increases, direct labor also increases
with the same rate.
11. The packaging cost will increase annually by Php900.00.
12. Utilization expenses such as electricity, water and charcoal will
increase by 5% average rate, annually.
13. Advertising expense will be Php8,000.00 for the first year.
14. Computer will be depreciating by 5% annually.
15. Furniture and Fixtures will be depreciated for 2 % annually.
16. The basis for depreciation is acquisition cost without salvage
value, thus, the depreciation expenses for all depreciable assets
will be at fixed rate.
17. Miscellaneous expenses such as transportation and other small
amount expenses will be allotted a Php1000, annually.
18. Accounts payable and receivables are assumed by Kapitan
Kulay.
19. The estimated uncollectible annually is 2 % based on accounts
receivable balance.
18. By the year 2011 the owner decided to withdraw Php10,000 for
personal use.

19. On its 5th year of operation, the business acquired additional

computer, which depreciate at the same rate as the old one,
Office supplies of Php3,000 and furniture and fixture costing
Php5,000, which depreciates at 2% annually. All acquisition
was made on cash basis.