Philtech Institute of Arts

and Technology, Inc.

SUBJECT:
ENTREPRENEURSHIP
 LESSON 5: 7 P’s of Marketing and Branding
Learning Outcomes:
At the end of this session, you will be able to: Yearly increase in revenue is assumed at 5%
1. Describe the Concept of Marketing Mix; Yearly increase in cost is assumed at 5%
2. Identify the seven P’s in the Marketing Mix;
3. Identify the commonly used brand strategy; How to Increase your Sales
4. Developed a Brand Name. ❖ Improve profit by looking at the money you earn from sales, and increase:
The number of customers
Let’s Start: The volume of goods or services existing customers to buy
TOPIC 1: The Marketing Mix (7P’s) in Relation to the Business Opportunity The sales price
Marketing Mix is a set of controllable and connected variables that a company gather to satisfy a
customer better than its competitor. It is also known as the “Ps” in marketing. Originally, there were Entreprenuership should be practiced not as a science but as an art. Creativity should always be
only 4Ps but the model has been continually modified until it became 7P’s. The original 4 P’s stands applied to entrepreneur by regularly evaluating the market and the environment and responding to
for product, place, price and promotion. Eventually, three elements have been added, namely: the changes in them.
people, packaging and positioning to comprise the 7 P’s.
Name: ________________________________________ Year/Section: __________________
The 7 P’s of Marketing Mix
1. PRODUCT - refers to any goods or services that are produced to meet the consumers’ wants, tastes Activity #9: Compute the Gross Profit
and preferences. Direction: Compute and show the solution of the given problem.
2. PLACE - represents the location where the buyer and seller exchange goods or services. It is also 1. Annie bought one dozen smartphones for P200,000.00 with a discount of 5%. She sold half dozen
called as the distribution channel. It can include any physical store as well as virtual stores or online at a price of P18,000.00 per unit. However, a new model of smartphone became available in the
shops on the Internet. market, so she sold the remaining half dozen @ P12,000.00 each unit. What was her profit or loss?
Compute the following requirements:
a. Gross profit rate
b. Operating profit margin rate
c. Net profit margin rate
d. Return on Investment

Quiz #8:
True or False. Write True if the statement is correct and False if the statement is incorrect.
___________1. The revenue refers to the purchase price of the product including of the product
including the total outlay required in producing it.
___________2. The operating profit margin is the second level of revenue in the income statement.
___________3. The Return of investment (ROI) measures the amount of net income per peso
invested to the business.
___________4. The current ratio measures its short-term obligations with its most liquid assets and
therefore excludes inventories from its current assets.
___________5. The financial statement records all the operating results such as sales, expenses and
profits or losses.

1 30
 Channel 1 contains two stages between producer and consumer - a wholesaler and a retailer. A
wholesaler typically buys and stores large quantities of several producers' goods and then breaks into
bulk deliveries to supply retailers with smaller quantities. For small retailers with limited order
quantities, the use of wholesalers makes economic sense.

Channel 2 contains one intermediary. In consumer markets, this is typically a retailer. A retailer is a
The average total assets are by dividing the sum of the total assets at the beginning and end of the company that buys products from a manufacturer or wholesaler and sells them to end users or
period. customers. In a sense, a retailer is an intermediary or middleman that customers use to get products
from the manufacturers.

Channel 3 is called a "direct-marketing" channel, since it has no intermediary levels. In this case the
manufacturer sells directly to customers.

3. PRICE - the value of money in exchange for a product or service.

4. PROMOTION - refers to the complete set of activities, which communicate the product, brand or
service to the user. The idea is to attract people to buy your product over others. Advertising,
Personal Selling, Sales Promotion, Direct Marketing, and Social Media are examples of promotion.
5. PEOPLE - the ultimate marketing strategy. They sell and push the product. People are one of the
most important elements of the marketing mix today.
6. PACKAGING - a silent hero in the marketing world. Packaging refers to the outside appearance of a
product and how it is presented to the customers. Packaging is highly functional. It is for protection,
containment, information, utility of use and promotion.
7. POSITIONING - refers to a process used by marketers to create an image in the minds of a target
market.

TOPIC 2: Develop a Brand Name

Brand Name is a name, symbol, or other feature that distinguishes a seller's goods or services in the
marketplace. Your brand is one of your greatest assets because your brand is your customers' over-all
experience of your business. Brand strategy is a long-term design for the development of a popular
brand in order to achieve the goals and objectives. A well-defined brand strategy shakes all parts of a
business and is directly linked to customer needs, wants, emotions, and competitive surroundings.

Branding is a powerful and sustainable high-level marketing strategy used to create or influence a
brand. Branding as a strategy to distinguish products and companies and to build economic value to
both customers and to brand owners, are described by Pickton and Broderick in 2001.

Commonly Used Branding Strategy

1. Purpose - "Every brand makes a promise. But in a market in which customer confidence is little and
budgetary observance is great, it’s not just making a promise that separates one brand from another,
29 but having a significant purpose," (Allen Adamson).
2
 According to Business Strategy Insider, purpose can be viewed in two ways:
a.Functional - This way focuses on the assessments of success in terms of fast and profitable reasons.
For example the purpose of the business is to make money.
b.Intentional - This way focuses on fulfillment as it relates to the capability to generate money and do
well in the world.

2. Consistency - The significant of consistency is to avoid things that don’t relate to or improve your
brand. Consistency aids to brand recognition, which fuels customer loyalty.

3. Emotion - There should be an emotional voice, whispering "Buy me". This means you allow the
XYZ Trading appears to have earned 6.39% of its total sales of P734,000 during the year. This profits
customers have chance to feel that they are part of your brand. You should find ways to connect
rate must be compared with those of other similar businesses within the industry.
more deeply and emotionally with your customers. Make them feel part of the family and use
emotion to build relationships and promote brand loyalty.
Profit is determined by:
 the money you get from sales
4. Flexibility - Marketers should remain flexible to in this rapidly changing world. Consistency targets
 the cost of stock – if you're selling a product
at setting the standard for your brand, flexibility allows you to adjust and differentiate your approach
 all the expenses you incurred
from your competition.
Income earned by the business are sales & gross profit. Commissions, discounts , fixed expense are
business expenses.
5. Employee Involvement -It is equally important for your employees to be well versed in how they
communicate with customers and represent the brand of your product.
Topic 2: Analyse the Liquidity Status of the Business
Liquidity Ratios
6. Loyalty - Loyalty is an important part of brand strategy. At the end of the day, the emphasis on a
Current ratio = Current assets / Current liabilities
positive relationship between you and your existing customers sets the tone for what potential
Quick ratio =(Current assets – Inventories) / Current liabilities
customers can expect from doing business with you.
= (Cash and equivalents + Marketable securities + Accounts receivable) / Current
liabilities
7. Competitive Awareness - Do not be frightened of competition. Take it as a challenge to improve
your branding strategy and craft a better value in your brand.
The quick ratio measures its short-term obligations with its most liquid assets and therefore excludes
inventories from its current assets.
Name: ______________________________________________ Year/Section:
______________
Financial statements are important in a company management as a means of communicating past
ACTIVITY #5: The Power of Color!
successes as well as future expectations. The financial statement records all the operating results
I am going to show you some colors. For each one, write down the FIRST company or product that
such as sales, expenses and profits or losses.
comes in to your head when you see the color. What’s the FIRST BRAND you think of when you see
this colors?
Return of Investment (ROI)
The Return of investment (ROI) measures the amount of net income per peso invested to the
business.
The formula to compute ROI is as follows
3
28
 The operating profit margin of the business measures the percentage of profit available after
deducting the cost of sales & operating expenses of the business. A higher operating profit margin is
favorable to the business.

Net Profit Margin Rate

The Income statement is the net profit margin & the third level in the revenue. The business is only
given consideration like interest expense and income tax.

The income statement of XYZ Trading does not reflect any data on interest expense. Only income tax
has been deducted from the operating profit margin.

27
27
4
 The gross profit rate measures the percentage of gross profit to sales, indicating the profit that the
business realizes from the sale of the product.

The gross profit rate may signal to the entrepreneur that the amount of margin on sales is 21.39%.
This rate will be used to determine whether the amount of gross profit can cover the operating of the
business. Since the gross profit rate of XYZ Trading is 21.39%, the cost ratio to sales will be 78.61%.
This information will help the entrepreneur in assessing whether the cost is too high or too low. Any
product with a very high cost will not become competitive in the market. The gross profit rate will
also help the entrepreneur set the selling price.

Operating Profit Margin Rate

The operating the profit margin is the excess of gross profit from operating expenses.

The operating profit margin is the second level of revenue in the income statement. At this stage, not
only the cost of buying or making the product that has been deducted is included but also the
operating expenses. These are expenses incurred during a particular period only, and are not
expected to provide benefits to any future period. The operating expenses are also period costs.

In case there are no financing charges like interest, expenses, and income tax, the amount of the
operating profit margin is equal to the net income.

This information that the business realized an income of P 67,000.00 during the year after deducting
5 the cost and operating expenses from the sales made.

26
 LESSON 6: 4 M’s of Production and Business Model
Learning Outcomes:
At the end of this session, you will be able to:
1. Describe the 4M’s (Manpower, Method, Machine, Materials) of operations in relation to the
business opportunity;
2. Develop a product description;
3. Create a prototype of the product;
Fixed costs generally are more static in nature. They include: 4. Test the product prototype;
1. Office expenses such as supplies, utilities, a telephone for the office, etc.
2. Salaries and wages of office staff, salespeople, officers and owners Let’s Start:
3. Payroll taxes and employee benefits TOPIC 1: 4 M’s of Operations in Relation to the Business Opportunity and Developing Business
4. Advertising, promotional and other sales expenses Model
5. Insurance The most serious issues in the whole production system are the inputs and the transformation
6. Auto expenses for salespeople process. Their quality determines the quality of the output. The factors involved in the input and the
7. Professional fees production process are usually referred to as the Four M’s of production, namely Manpower,
8. Rent Method, Machine, and Materials.

Manpower
 Man in management is referred to as a human resource.
 Talks about human labor force involved in the manufacture of products.
 It is measured as the most serious and main factor of production. The entrepreneur must
determine, attain and match the most competent and skilled employees with the jobs at the
most appropriate time period.
 Educational qualifications and experience, status of employment, numbers of workers
required, skills and expertise required for the job are some of the manpower criteria that must
be highly considered by the entrepreneur.
Profit is the gross income. The amount of gross profit provides information to the entrepreneur
about revenue earned from sales.
Material
The term cost refers to the purchase price of the product including of the product including the total
 Material is a basic ingredient in management be it a service industry or a product industry.
outlay required in producing it.
 Talks about raw materials necessary in the production of a product. Materials mainly form
The gross profit margin is computed as follows: part of the finished product. Just in case the resources are below standard, the finished product
25 will be of unsatisfactory as well. 6
  The entrepreneur may consider cost, quality, availability, credibility of suppliers and waste 6. Refer to the amount of merchandise or goods sold by the business for a given period of time.
that the raw material may produce. a. Cost of Goods Sold c. Purchases
b. Freight-in d. Merchandise Inventory End
Machine
 Machine is the basic tools to produce goods or to generate services. 7. Refers to amount paid to transport goods or merchandise purchased from the supplier to the
 Discusses about manufacturing equipment used in the production of goods or delivery of buyer.
services. a. Cost of Goods Sold c. Purchases
 In the process of selecting the type of equipment to purchase, the entrepreneur may consider b. Freight-in d. Operating expenses
types of products to be produced, production system to be adopted, cost of the equipment,
capacity of the equipment, availability of spare parts in the local market, efficiency of the
8. Refer to the merchandise or goods purchased.
equipment and the skills required in running the equipment.
a. Cost of Goods Sold c. Purchases
b. Freight-in d. Operating expenses
Method

 Method a set of procedures and instructions. The visible methods of a company include: 9. Refers to goods and merchandise left at the end of operation or accounting period.
Plans, Policies, Procedures, and Data. a. Cost of Goods Sold c. Purchases
 Production method discusses the process or way of transforming raw materials to finished b. Freight-in d. Merchandise Inventory End
products. The resources undergoes some stages before it is finalized and becomes set for
delivery to the target buyers. 10. Used especially when the nature of business is merchandising or retail.
 The selection of the method of production is dependent on product to produce, mode of a. Revenue b. Cost c. Freight-in d. Sales
production, manufacturing equipment to use and required skills to do the work.
LESSON 8: Computation of Gross Profit
Product Description Learning Outcomes:
 Is the promotion that explains what a product is and why it’s worth buying? The purpose of a At the end of this session, you will be able to:
product description is to provide customers with details around the features and benefits of the 1. compute for profits
product so they’re obliged to buy. 2. define profitability, liquidity & solvency
3. identify commonly used profitability ratios.
 Know who your target market is, focus on the product benefits, tell the full story, use natural
language and tone, use power words that sell, and use good images. These are guidelines for
Let’s Start:
you to have a good product description; since some customers are very particular with it since
Topic 1: Computation of Gross Profit
they consider the welfare of their family, if it is safe to use.
Profit is the amount you gain after selling your product. In computing your profit, you just simply
follow this formula:
Prototyping
Sales - Cost of Goods Sold = Gross Profit
A duplication of a product as it will be produced, which may contain such details as color, graphics,
packaging and directions. One of the important early steps in the inventing process is making a
The gross profit represents the difference between net sales and cost of sales.
prototype. Benefits are the reasons why customers will decide to buy the products such as
Variable costs are those things that change based on the amount of product being made and are
affordability, efficiency or ease of use. The features of the product or service merely provide a
incurred as a direct result of producing the product.
descriptive fact about the product or service.
Variable costs include:
It is better to test your product prototype to meet customers’ needs and expectations; and
1. Materials used 5. Plant supervisor salaries
for your product to be known and saleable. Pretesting of the product or service is similar to a sample
2. Direct labor 6. Utilities for a plant or a warehouse
of the product or service given to the consumer free of cost in order that he/she may try the product
3. Packaging 7. Depreciation expense on production equipment
before committing to a purchase.
4. Freight 8. Machinery 24
7
 Supplier are your business partners, without them your business will not live. You need them as
much as you need your customers to be satisfied. But as an entrepreneur you have to choose a
potential supplier that has loyalty and value your partnership; a supplier that would lead you to the
fulfillment of your business objectives, mission and vision.

Value chain is a method or activities by which a company adds value to an item, with production,
marketing, and the provision of after-sales service. The main goal and benefit of a value chain, and
therefore value chain analysis, is to make or support a competitive benefit.

A supply chain is a structure of organizations, people, activities, data, and resources involved in
moving a product or service from supplier to customer. The main objective of supply chain
management includes management of a varied range of components and procedures, for instance,
storing of raw materials, handling the inventory, warehousing, and movement of finished product
from the point of processing to the point of consumption.

TOPIC 2: Business Model

A business model is a company’s core
strategy for profitably doing business.

QUIZ #7:
Business model describes the reasons
Multiple Choice. Encircle the correct letter.
of how an organization creates,
1. Irene sells fashion bags online. She gets each bag for P 150.00 from a local supplier. She then adds
delivers, and captures value in
P 100.00 as mark-up for each bag. How much is the selling price of each bag?
economic, social, cultural or other
a. P 200.00 b. P 250.00 c. P 300.00 d. P 350.00
contexts. The development of
business model construction and
2. Refers to the amount added to the cost to come up with the selling price.
variation is also called business model
a. Revenue b. Cost c. Mark Up d. Mark Down
innovation and forms a part of business plan.
3. A result when sales exceed the cost to produce goods or render the services.
Importance of a Business Model
a. Revenue b. Cost c. Mark Up d. Mark Down
 Serves as an ongoing extension of feasibility analysis
4. The costs incurred through payment of utilities such as water, electricity, internet connection is  Focuses attention on how all the elements of a business fit together and constitute a
considered as? working whole.
a. Costs c. Operating expenses  Describes why the network of participants needed to make a business idea viable are willing
b. Purchases d. Personal Expense of the owner to work together.
 Articulates a company's core logic to all stakeholders.
5. Refers to goods and merchandise at the beginning of operation of business or accounting period.
a. Operating expenses c. Merchandise Inventory End There are important phases in developing your business model, namely;
b. Freight-in d. Merchandise Inventory Beginning  Identifying the specific audience
 Establishing business process
23  Recording a business resources 8
  Developing strong value proposition
 Determining key business partners
 Creating a demand for today’s generation strategy and be open for innovations

After developing a business model, we will proceed in developing a business plan. To be able to
successfully complete this module, you need to prepare a business plan and operate your plan and
finally keep records of your business transactions.

What is a Business Plan?

A business plan is a written document describing a company’s core business activities, objectives, and
how they plan to achieve their goals.

Business plan is an important tool for you to have an idea about the future of your business. Your
business plan will be your guide in the moment you will be implementing and operating your business
proposal.

The following are the components found in a Business Plan

Introduction- this part discusses what is the business plan all about.
 Executive Summary- is part of the business plan which is the first to be presented but the last
to be made.
 Management Section- shows how you will manage your business and the people you need to
help you in your operations.
 Marketing Section- shows the design of your product/service; pricing, where you will sell
and how you will introduce your product/service to your market.
 Financial Section- shows the money needed for the business, how much you will take in and
how much you will pay out.
 Production Section- shows the area, equipment and materials needed for the business.
 Competitive Analysis- is the strategy where you identify major competitors and research
their products, sales and marketing strategies.
 Market- The persons who will buy the product or services
 Organizational chart- is the diagram showing graphically the relation of one official to
another, or others of a company.

22

9
 Name: _____________________________________ Year/Section: __________________

The projected monthly costs covering the first of operation of Ms. Nista’s Fit Mo’to RTW Online
Selling Business is presented in Table 6.
Activity #6
Problem No. 1. “In your home, when you want to eat egg sandwich before going to school, your
mother would surely prepare it for you. Your egg sandwich would not be produced without a
process.”
1. Who would be your manpower? __________________________________
2. What would be your materials?___________________________________
3. What machines or tools would you use? ____________________________
4. What methods are needed to produce the egg sandwich? (Cooking procedures- enumerate them).

Quiz #6:
Multiple Choice. Encircle the correct letter.
1. Referred to as a human resource.
a. Method b. Material c. Man d. Machine

2. A basic ingredient in management be it a service industry or a product industry.

a. Method b. Material c. Man d. Machine

3. The basic tools to produce goods or to generate services.

a. Method b. Material c. Man d. Machine

4. A set of procedures and instructions.

a. Method b. Material c. Man d. Machine

5. Part of the business plan which is the first to be presented but the last to be made.
Name: ________________________________________ Year/ Section: ___________ a. Marketing Section c. Management Section
b. Executive Summary d. Financial Section
Activity #8:
Mang Eduard operates a buy and sell business. He sells umbrellas in his shop near the city mall. He 6. The diagram showing graphically the relation of one official to another, or others of a company.
gets his umbrellas from a local dealer. Each umbrella costs 90.00 pesos each. Expecting rainy season a. Marketing Section c. Management Section
b. Executive Summary d. Organizational chart
to come, Mang Eduard purchased 4 dozens of umbrellas every week. The supplier then charges
200.00 pesos per dozen for freight. Mang Eduard can sell 12 umbrellas every day. Remember to use 7. A written document describing a company’s core business activities, objectives, and how they plan
the factors to consider in projecting revenues and refer to tables 4, 5 and 6 as your guide. Suppose to achieve their goals.
Mang Eduard purchases and sales is the same every month, fill in the necessary information in table a. Financial Plan c. Marketing Plan
6. b. Business Plan d. Lesson Plan

8. Shows the money needed for the business, how much you will take in and how much you will pay
out.
21 a. Financial Section c. Management Section
b. Organizational chart d. Marketing Section
10
 9. Shows how you will manage your business and the people you need to help you in your operations. Let us now substitute the values from table 4 and table 5. Since there is no Merchandise Inventory,
a. Financial Section c. Management Section beginning and end, let us add Cost of Purchases and Freight-in to get the Cost of Goods Sold.
b. Organizational chart d. Marketing Section

10. Shows the design of your product/service; pricing, where you will sell and how you will introduce
your product/service to your market.
a. Financial Section c. Management Section
b. Organizational chart d. Marketing Section

LESSON 7: Forecasting Revenues And Costs Part 1

Learning Outcomes:
At the end of this session, you will be able to:
 Identify essential factors in forecasting revenues and costs;
 Calculate mark-up and selling price of a product or merchandise;
 Compute projected revenues;
 Compute projected costs.
Now that the cost of goods sold is now calculated, let us now identify expenses that the business
 Create a table showing projected revenue and costs.
incurs in its operation. Operating expenses such as Internet connection, Utilities like electricity and
miscellaneous expense are important to keep the business running. These expenses are part of the
Let’s Start:
total costs incurred by the business in its day-to-day operation and are paid every end of the month.
TOPIC 1: Forecasting the revenues of the business
The operating expenses and assumed amount are presented below:
Forecasting is the tool used in planning that aims to support management or a business owner in its
desire to adjust and cope up with uncertainties of the future.

Revenue is a result when sales exceed the cost to produce goods or render the services. Revenue is
recognized when earned, whether paid in cash or charged to the account of the customer.

Other terms related to revenue includes Sales and Service Income.

Sales is used especially when the nature of business is merchandising or retail, while Service Income
is used to record revenues earned by rendering services.

These factors should serve as basis in forecasting revenues of the business. These factors are:
1. The economic condition of the country. When the economy grows, its growth is experienced by To calculate the total costs incurred by the business, cost of goods sold and total operating expenses
the consumers. Consumers are more likely to buy products and services. The entrepreneur must be are then added. The calculation for the costs incurred for the month of January is presented below:
able to identify the overall health of the economy in order to make informed estimates. A healthy
economy makes good business.

2. The competing businesses or competitors. Observe how your competitors are doing business.
Since you share the same market with them, information about the number of products sold daily or
the number of items they are carrying will give you idea as to how much your competitors are selling.
11 20
 Let us calculate the cost of goods sold of Ms. Fashion Nista’s online selling business for the month of
January.
Table 4 shows the costs incurred during the first month of operation of Fit Mo’to Ready to Wear
Online Selling Business. Since Ms. Nista get her stocks from an online supplier, there is no need to
order ahead and stock more items. Therefore, there is no Merchandise Inventory, beginning as well
as Merchandise Inventory, end. Ready to wear items purchased online from the supplier are then
sold as soon as they arrived.
Cost of goods is calculated by simply multiplying the number of items sold every month (300 t-shirts
and 180 pairs of jeans) to its corresponding cost per unit (90.00 pesos for every t-shirt and 230.00
pesos for every pair of jeans). A cost in transporting the goods from the supplier to the seller (Ms.
Nista) or Freight-in is then added to Net Cost of Purchases.
Table 5 shows how freight-in is calculated. It is assumed that at an average, Ms. Nista pays at least
250.00 pesos for every 12 items delivered successfully by her supplier through a courier service. Since
her average order is 480 pieces every month, she pays:
480 pcs. / 12 pcs. = 40
40 x 250.00 = 10,000.00
19
This will give you a benchmark on how much products you need to stock your business in order to
cope up with the customer demand. This will also give you a better estimate as to how much market
share is available for you to exploit.
3. Changes happening in the community. Changes’ happening in the environment such as customer
demographic, lifestyle and buying behaviour gives the entrepreneur a better perspective about the
market. The entrepreneur should always be keen in adapting to these changes in order to sustain the
business. For example, teens usually follow popular celebrities especially in their fashion trend. Being
able to anticipate these changes allows the entrepreneur to maximize sales potential.
4. The internal aspect of the business. Another factor that affects forecasting revenues in the
business itself. Plant capacity often plays a very important role in forecasting.
Now that all factors affecting forecasting revenues are identified, you can now calculate and project
potential revenues of your chosen business. The table below shows an example of revenues
forecasted in a Ready to Wear Online Selling Business.
Example: Ms. Fashion Nista recently opened her dream business and named Fit Mo’to Ready to Wear
Online Selling Business, an online selling business which specializes in ready to wear clothes for teens
and young adults. Based on her initial interview among several online selling businesses, the average
number of tshirts sold every day is 10 and the average pair of fashion jeans sold every day is 6. From
the information gathered, Ms. Nista projected the revenue of her it Fit Mo’to Ready to Wear Online
Selling Business.
She gets her supplies at a local RTW dealer in the city. The cost per piece of t-shirt is 90 pesos, while a
pair of fashion jeans costs 230 pesos per piece. She then adds a 50 percent mark up to every piece of
RTW sold.
Mark up refers to the amount added to the cost to come up with the selling price. The formula for
getting the mark up price is as follows:
Mark Up Price = ( Cost x desired mark up percentage)
Mark Up for T-shirt = ( 90.00 x .50)
Mark Up for T-shirt = 45.00
In calculating for the selling price, the formula is as follows:
Selling Price = Cost + Mark Up
Selling Price = 90.00 + 45.00
Selling Price for T-shirt = 135.00
12
 Table 1 shows the projected daily revenue of Ms. Nista’s online selling business. Computations
regarding the projected revenue is presented in letters in upper case A, B, C, D, and E.
Table 2 shows the projected monthly and yearly revenue of Ms. Nista’s online selling business.
Computations about the monthly revenue is calculated by multipying daily revenues by 30 days ( 1
month).
Example, in table 1 the daily revenue is 3,420.00. To get the monthly projected revenue it is
multiplied by 30 days. Therefore,
Projected Monthly Revenue = Projected daily revenue x 30 days
Projected Monthly Revenue = 3,420.00 x 30
Projected Monthly Revenue = 102,600.00
On the other hand, the projected yearly revenue is computed by multiplying the monthly revenue by
12 months. The calculation for projected yearly revenue is as follows.
Projected Yearly Revenue = Projected daily revenue x 365 days
Projected Yearly Revenue = 3,420.00 x 365
Projected Yearly Revenue = 1,248,300.00
13
Let’s Start:
TOPIC 2: Forecasting the Costs to be Incurred
The business also incurs costs in its operation, these costs are called Operating Expenses.
Operating Expenses such as payment on Internet connection, Utilities expense (i.e.Electricity),
Salaries and Wages and Miscellaneous are essential in the operation of the business; this allows the
business to continue operate in a given period of time.
Let us identify costs and expenses incurred by the business.
Cost of Goods Sold / Cost of Sales refer to the amount of merchandise or goods sold by the business
for a given period of time. This is computed by adding the beginning inventory to the Net Amount of
Purchases to arrive with Cost of goods available for sale from which the Merchandise Inventory end is
subtracted.
Merchandise Inventory Beginning refers to goods and merchandise at the beginning of operation of
business or accounting period.
Purchases refer to the merchandise or goods purchased. Example: Cost to buy each pair of Jeans or t-
shirt from a supplier.
Merchandise Inventory End refers to goods and merchandise left at the end of operation or
accounting period.
Freight-in refers to amount paid to transport goods or merchandise purchased from the supplier to
the buyer. In this case, it is the buyer who shoulders this costs.
In a merchandising business such as Fit Mo’to Ready to Wear Online Selling Business, the formula to
compute for costs of goods sold is as follows:
18

For Table 3, use the following assumed increases in sales every month. From January to May, 5
percent increase from previous sales. For the month of June, 10 percent increase from previous sales.
For the months July to December, record the same sales every month.
Table 3 shows the projected monthly revenues covering one year of operation. The table shows an
average increase of revenue every month by 5 percent except June, July to October and December.
While the month of June has twice the increase from previous month, 10 percent. Let us consider
that months covering July to October are considered to be Off-Peak months, therefore sales from July
to October are expected to decrease. It is assumed that there is no increase in revenue from July to
August while from August to October the decrease in revenues is 5 percent from previous month.
Since revenues from sales of RTW’s are considered to be seasonal, it assumed that there is 10 percent
increase in revenue from November to December.

Computation for assumed increase of revenue on specific months is as follows:

Projected Monthly Revenue (Increase) = Revenue (January) x 5 % increase
Projected Monthly Revenue (Increase) = 102,600.00 x .05
Projected Monthly Revenue (Increase) = 5,130.00

Projected Revenue for February = Revenue (January) + Amount of increase

Projected Revenue for February = 102,600.00 + 5,130.00
Projected Revenue for February = 107,730.00
LESSON 7: Forecasting Revenues And Costs Part 2
Learning Outcomes: On the other hand, decrease in revenue is computed as follows:
At the end of this session, you will be able to:
Projected Monthly Revenue (Decrease) = Revenue (August) x 5 % increase
 Identify essential factors in forecasting revenues and costs;
Projected Monthly Revenue (Increase) = 144,041.14 x .05
 Calculate mark-up and selling price of a product or merchandise;
Projected Monthly Revenue (Increase) = 7,202.06
 Compute projected revenues;
 Compute projected costs.
Projected Revenue for September = Revenue (August) - Amount of decrease
 Create a table showing projected revenue and costs.
Projected Revenue for September = 144,041.14 – 7,202.06 14
17 Projected Revenue for September = 136,839.08
 Name: _______________________________ Year/Section:
____________

Quiz #7:
Compute the following:

Aling Minda is operating a buy and sell business, she sells broomsticks (walis tingting) in her stall at a
local market. She gets her broomsticks from a local supplier for 25 pesos each. She then adds 50
Important Assumptions: percent mark-up on each broomstick. Every day, aling Minda can sell 30 broomsticks a day.
February to May Increase of 5% from previous revenue
June Increase of 10% from previous revenue Use the template below and fill in the necessary figures based on the scenario. Remember to use the
July to August The same Revenue factors to consider in projecting revenues and refer to tables 1, 2 and 3 as your guide.
September to October Loss 5% from previous revenue
November Increase 5% from previous revenue
December Increase 10% from previous revenue

Use the calculations you have made in Table 1 to successfully complete the information in Tables 2
and 3 and calculate the projected monthly and yearly revenue of Aling Minda’s business.

15
16