Capital contribution of each partner is P1, 000,000 with equal profit and loss

sharing
Total purchases of total Direct materials is presumed to increase 10% annually
due to increase in production and 5% due to inflation and changes in market
indexes while purchases of indirect materials is presumed to increase 5% due to
inflation rate
Purchases from Aetas is presumed to increase 10% annually. It is also presumed
that
Raw materials ending is 10% of the annual purchases
Raw materials used is 90% of the annual purchases plus beginning inventory
Finished goods ending is 10% of the total goods manufactured
It is presumed that only 70% of production is sold in the 1 st year operations. The
remaining 30% is retained on the finished goods ending
It is presumed that only 80% of production is sold in the 2 ndyear operations plus
beginning inventory. The remaining 20% is retained on the finished goods ending
There will be an increase in mark up on cost of 5% annually
It is presumed that only 90% of production is sold in year operations plus
beginning inventory. The remaining 10% is retained on the finished goods ending
All factory expenses except depreciation, amortization, factory rent are assumed
to increase 5% annually due to inflation rate.
All operating expenses except depreciation, amortization, rental payment and
annual salaries related to the operations are assumed to increase annually by
5% due to inflation rate
Depreciation and amortization is computed using the straight line method
Accrued expenses are assumed to be one month payable (utilities, sss
contribution, Phil health contribution, hdmf contribution, withholding taxes and
salaries)
Every partner is entitled to a withdrawal of 20% based on their share in profit and
is fully utilized.
Income tax is estimated at 30% of the annual operating income