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INTRODUCTION

 Rice production in the country of Philippines is important to the food supply


in the country and economy.
 The Philippines is the 9th largest rice producer in the world, accounting 2.8%
of global production. The Philippines was also the world’s largest rice
importer as of 2010.
 Rice is one of the most in demand food for Filipinos.
 Rice Retailing is a profitable business because rice is the staple food in our
country.
 Rice is an important primary staple food in many Asian countries especially
in the Philippines.
OBJECTIVES

 To determine if it is justifiable to invest in this kind of business.


 To determine what factors and alternatives should be considered in starting
a rice retail business.
 To determine where consumer need exists within your target business area.
 To be able to secure the business financially.
MATERIALS
 Rice Boxes

Quantity Price
7pcs. P 2,916.67

 Rice Scoop

Quantity Price
1 P 500
 Push Cart

Quantity Price
1 P 1,200

 Weighing Scale

Quantity Price
1 P 1,800
PRODUCTS
 Sinandomeng

# of sacks in 50kg Price per kilogram Total price


40 P 28.05 P 56,100

 Dinorado

# of sacks in 50kg Price per kilogram Total price


35 P 34.00 P 59,500
 Wag-wag

# of sacks in 50kg Price per kilogram Total price


30 P 25.50 P 38,250

 Milagrosa

# of sacks in 50kg Price per kilogram Total price


25 P 25.05 P 31,312.50
 Long Grain

# of sacks in 50kg Price per kilogram Total price


30 P 25.50 P 38,250

 NFA Rice

# of sacks in 50kg Price per kilogram Total price


55 P 21.25 P 58,437.50

 Malagkit

# of sacks in 50kg Price per kilogram Total price


10 P 34.00 P 17,000
ESTIMATED INVESTMENT COST

A. Basic Equipment

Rice boxes P 2916.67


Rice Scoop P 500
Push cart P 1200
Weighing scale P 1800
total P 6416.67
B. Basic Monthly Supply
Name # of sacks in 50kg Price per kilogram Total price
Sinandomeng 40 P 28.05 P 56,100
Dinorado 35 P 34.00 P 59,500
Wag-wag 30 P 25.50 P 38,250
Milagrosa 25 P 25.05 P 31,312.50
Long Grain 30 P 25.50 P 38,250
NFA Rice 55 P 21.25 P 58,437.50
Malagkit 10 P 34.00 P 17,000
total P 298,850
C. Packaging

Sando Bags 6,000 pcs. P 900.00

D. Rental
P 10,000 monthly + P 10,000 advance monthly rent = P 20,000

Estimated Total Investment Cost: P 326,166.67


MONTHLY COST OF GOODS SOLD

Merchandise Inventory Beginning


(20%)(P 299,750) = P 59,950
Add: Purchase (80%) = P 239,800
Total Goods Available for Sale = P 299,750
Less: Merchandise Inventory Ending = P 59,950
Cost of Goods Sold = P 239,800
Add: 20% Mark-up = P 47,960
Total Sales = P 287,760
ESTIMATED MONTHLY INCOME

Sales = P 287,760
Less: Cost of Resupplied Goods = P 239,800
Gross Sales = P 47,960
Less: Operating Expenses:
• Labor (3 x P200/day x 25days) = P 15,000
• Water & Electricity = P 1,500
Less: Rental = P 10,000

Monthly Income = P 21,460


PROBLEM

 A group of Civil Engineers plans to start a rice retailing business that will
need a total investment of P 326,116.67 that will have an estimated annual
revenue of P 3,309,240 for 10 years. Taxes & Insurance will be 3% of the first
cost per year. Operation & Maintenance will be P 3,206,100. The group of
Civil Engineer expects a capital to earn not less than 25% before income
taxes. Is this a good investment?
SOLUTION
 Annual Cost:
 Depreciation
25%
𝑑 = ₱ 326,166.67 1+25% 10 −1

𝑑 = ₱ 9,808.67
 Insurance & Taxes
= 3% ₱ 326,166.67
= ₱ 9,785
 Operation & Maintenance
 Supply Goods
= ₱ 239,800 × 12𝑚𝑜𝑛𝑡ℎ𝑠
= ₱ 2,877,600
 Cellophanes (packaging)
= ₱ 750 × 12𝑚𝑜𝑛𝑡ℎ𝑠
= ₱ 9,000
 Labor Cost
= 3𝑝𝑒𝑟𝑠𝑜𝑛𝑠 × ₱200/𝑑𝑎𝑦 × 25𝑑𝑎𝑦𝑠/𝑚𝑜𝑛𝑡ℎ × 12𝑚𝑜𝑛𝑡ℎ𝑠
= ₱ 180,000
 Rental
= ₱10,000/𝑚𝑜𝑛𝑡ℎ × 12𝑚𝑜𝑛𝑡ℎ𝑠
= ₱ 120,000
 Water & Electricity
= ₱ 1,500/𝑚𝑜𝑛𝑡ℎ × 12𝑚𝑜𝑛𝑡ℎ𝑠
= ₱ 18,000

Total Annual Cost = ₱ 3,224,193.67


 Annual Worth:
Annual Cost = P 3,224,193.67
Add: Investment Interest
P 326,166.67(25%) = P 81,541.67

Total Annual Worth = P 3,305,735.34


COMPARING ALTERNATIVES
(RICE MILLING MACHINE)
Alternative A Alternative B

First Cost P 75,000 P 40,000


Annual Operating Cost P 10,000 P 16,000
Annual Labor Cost P 24,000 P 36,000
Insurance and Taxes 3.5% 3.5%
Payroll Taxes 3.2% 3.2%
Estimated Life Span 10 10
Salvage Value P 5,000 P 2,000
COMPARING ALTERNATIVES
(RICE MILLING MACHINE)
Annual Cost:
Solution:
Alternative A Alternative B
Operating Cost P 10,000 P 16,000
Insurance & Taxes P 75,000(3.5%) P 40,000(3.5%)
= P 2,625 = P 1,400
Labor Cost 1worker x P 200 x 10days x 12month 1worker x P 200 x 15days x 12month
= P 24,000 = P 36,000
Payroll Tax P 24,000(3.2%) P 36,000(3.2%)
= P 768 = P 1,152
Depreciation (P75,000 – P5,000)
16%
(P40,000 – P2,000)
16%
(1+16%)10 −1 (1+16%)10 −1
= P 3,283.08 = P1,782.24
Annual Interest P 75,000(16%) P 40,000(16%)
= P 12,000 = P 6,400
Total P 52,676.08 P 62,734.24