JTC Case Analysis

Jaime Tan Cruz Group (JTC Group) of companies is the owner of Maester Baker of Davao City.
They provide different kinds of bread, cakes, buns, etc. On the other hand, Jollibee Davao is one
of the member of JTC Group that considered as the regular customer of Maester Baker for
buns. The input of production for burger by the Jollibee are the buns. The production activities
of Maester Baker and burger by the Jollibee will be included and used to measure the income
generated by a country during a specific period of time.

A reason why we have to be collect national income figures is to provide an exact estimate of
changes within the volume of yield delivered amid one year, which can at that point be
compared with other years. Besides, GDP, GNP and NNP are measured using the income,
output and expenditure method which is noteworthy to evaluate the financial development of
a nation. A vital point about national income is that it is continuously communicated with
reference to a time interval. It is aimless to talk of the income of a person without saying the
period over which it is earned, say per week, per month, or per year. Essentially, it is
meaningless to talk of national income without saying the period over which it is created.

For the method of computing national income to be utilized for buns, I deliberately choose the
circular flow of income in a two-sector economy wherein factor income is earned from the
generation of products and services, and the income is went through on the purchase of
produced products utilizing the value added method. The value added method/ product
method is additionally known as the output method or inventory method. In this method, the
entirety add up to of the gross value of the final products and services in several segments of
the economy like industry, service, farming, etc. is obtained for the current year by deciding the
entire generation that was made amid the particular time period. The value gotten is the gross
domestic product. There are times that the goods produced by one sector is further prepared
by another sector. These goods are named as intermediate goods and are as included while
determining the value of final products.

To avoid the problem of double counting of value of products, the product method further
categorized into two approaches: Firstly is the Final Goods Approach In this method, only the
value of final goods and services are computed whereas evaluating GDP, notwithstanding of
any intermediate goods and their processing. This method takes into consideration only those
goods and services that obtained and consumed by the final customers within the economy.
Furthermore, within the value added strategy of measuring national income, the value of
materials included by producers at each stage of production to create the final good is
considered. The contrast between the value of output and inputs at each stage of production is
the value added. Hence, Value included= Value of output – Cost of intermediate goods. If the
differences are included up for all production sectors within the economy, the value of GDP is
computed.

Thereby, in simple way the buns will be computed either in Final Goods Approach wherein only
the value of final goods and services of Jollibee Davao are computed in measuring GDP
disregarding the processing and intermediate goods. Value Added Method in which the
materialz used by Maester Bakers in every stage of production to produce the buns is
considered. Thus way, I believe that the buns will credited to the Jollibee Davao since they
produce the final good to consume by the market. The burgers will be the final good and the
production of this final good will be added to the total output of companies in the economy. In
conclusion, the method show the contribution of each sector to the national income, hence
demonstrating the importance of different sectors relative to each other.