Sorsogon State College

Bulan Campus

Bulan, Sorsogon

KIARA’s Meat Shop

A Feasibility Study

Submitted by:

LENETTE H. GAUPO, BSA-V

Submitted to:

MICHAEL B. BONGALONTA, CPA, MBA, DBA

 • Introduction

Filipinos are known for their love for food. Serving varieties of cuisines in one meal, and

among those are meat recipes that almost all people like. Aside from the delightful taste it

possesses, it is a good source of protein that the human body needs.

The world’s meat consumption is commonly supplied by meat shops all over the world.

They provide fresh pork, beef, chicken directly from farms and growers, and even variety of

frozen processed goods.

Recently the demand for meat has been inflating due to the changes in price of some

commodities. Fish, for example, as a main alternative for meat had been and still continuing to

hike price due to the supply scarcity. Though we cannot consider it as a huge issue, still, it gave

an opportunity to some meat dealers and suppliers to provide more and earn more.

In Bulan, there are a lot of meat suppliers and meat shops which gives and offers a

definite supply of meat to Bulaneňos. There are, however, barangays in the municipality of

Bulan that are far from the center of commerce in the said municipality. For instance, barangay

San Isidro, is approximately 10 kilometers away from the town proper. It is nearly impractical to

travel 10 kilometers and spend additional 24 pesos as fare just to buy half kilo of meat for

supper. Clearly, there could be a way to avoid this additional cost and effort.

The barangay is slowly developing but still, it is lacking. There is a vegetable store, fish

vendors, stores, but there is no meat shop. Although thrice in every week, there is a meat supply,

still, people need an everyday supply of it. This is a good opportunity to establish a meat shop in

barangay San Isidro. This would be able to supply meat to its residents and the nearby barangays.
II. Market Study

A. Background of the study

Like any other place, there are consumers of meat and meat products in San Isidro. There

are supplies of such products and produce but somehow, it is not enough. And this study aims to

determine the viability of establishment of KIARA’s Meat Shop in barangay San Isidro of the

municipality of Bulan, and if investing in such business will be profitable.

B. Target market

San Isidro, one of the barangays of municipality of Bulan, province of Sorsogon is the

target market of KIARA’s and will cater the demand of the general population since this is a

primary commodity. The target customers of this business are the households of brgy. San Isidro,

and not the individual residents.

C. Supply analysis

In barangay San Isidro, the only supplier of meat and meat products is William Lim’s

Store, which in average, provides and sells approximately eight hundred and forty (840) kilos of

pork (computed through: each month, William Lim Store slaughters fourteen (16) times of hogs

weighing in average of sixty (60) kilos each.), approximately four hundred (400) kilos of chicken

and fifty (50) kilos of various frozen goods a week.

According to the interview with the owner of William Lim store regarding the number of

kilos of separated products from a whole hog, it was found out that out of the sixty (60) kilos hog

being slaughtered, the average net kilo after slaughter is fifty-five (55) kilos. Of the remaining

fifty-five (55) kilos, five (5) kilos are for the head, ten (10) kilos are for the thighs, two (2) kilos
are for the liver, three (3) kilos are for the intestines, six (6) kilos are for the spine and the

remaining twenty-nine (29) kilos are for the pork meat.

As for their chicken product, which is mainly chicken meat, they have a supplier for such

products.

This proposed business will supply mainly of pork and chicken products. Included are:

pork, thighs (pata), spine (buto-buto), liver (atay), head (mascara), intestines (isaw), chicken

(breast, legs, wings, etc.), chicken liver (atay), chicken feet (adidas), chicken intestines (isaw),

and chicken head (ulo).

D. Demand analysis

The demand of the proposed business, KIARA’s, is expected to arise from the

households in the barangay. The number of demand is determined to be the number of

households in eight puroks of barangay San Isidro, which is six hundred and forty (640)

households, that is according to the latest record of the said barangay.

In order to analyze the demand of the product in the market, a survey was conducted

through an interview conducted. One hundred thirty (129) respondents were taken as samples

from the total population, representing its twenty per cent (20%).

The interview conducted is for the purpose of determining and estimating the demand for

pork and chicken products in the target market. The respondents were asked of how many kilos

of pork products they buy in a monthly basis. 14.7% said 1 kilo, 27.1% said 2 kilo per week,

17.9% buys 3 kilos, 24.8% buys 4 kilos, 5.4% buys 5 kilos and 3.9% buys 6 kilos per month.

There are, however, those who said they rarely buy pork due to health and financial issues, and

they represent 6.2% of the total sample.

 The weekly pork demand is then calculated using the gathered data from samples and is

presented below.

TABLE 1. Demand for pork products

KILOS TOTAL X ESTIMATED X ESTIMATED

BOUGHT POPULA- COMPUTED NO. OF NUMBER DEMAND
PER TION RATE HOUSEHOLD OF KILO (kilo)
MONTH
0 640 0.062 40 0 0
1 640 0.147 94 1 94
2 640 0.271 173 2 346
3 640 0.179 114 3 342
4 640 0.248 159 4 636
5 640 0.054 35 5 175
6 640 0.039 25 6 150
TOTAL
1 640 1742

Also, the respondents were also asked of how many kilos of chicken they buy in a

monthly basis. 46.5% said they buy 1 kilo, 27.9% buys 2 kilo, 13.2% said 3 kilos, 3.9 buys 4

kilos, 1.5% buys 5 kilos per month, and 7% does not buy chicken at all due to health issues.

The estimated chicken meat demand is computed and illustrated below.

TABLE 2. Demand for chicken meat

KILOS TOTAL X ESTIMATED X ESTIMATED

BOUGHT POPULA- COMPUTED NO. OF NUMBER DEMAND (kilo)
PER MONTH TION RATE HOUSEHOLD OF KILO
0 640 0.07 45 0 0
1 640 0.465 298 1 299
2 640 0.279 179 2 358
3 640 0.132 84 3 252
4 640 0.039 25 4 100
5 640 0.015 9 5 45
6 640 0 0 6 0

TOTAL 1 640 1056

Thus, the demand for pork is 1,742 kilos, and 1,056 kilos both in a monthly basis.
 There is a separate interview conducted to determine the demand for the chicken head,

intestines, liver, and feet since this is not normally used for consumption. The interview focused

on the three “3” barbeque and “ihaw-ihaw” vendors in brgy. San Isidro. It was found out that

they each buy half kilo of each products on a daily basis. Thus, showing a weekly demand of ten

and a half (10.5) kilos of each of the three products. See for the table below.

TABLE 3. Demand for chicken products

CHICKEN DAILY NUMBER OF TOTAL TOTAL

PRODUCT DEMAND (IN VENDORS DAILY WEEKLY
KILO) DEMAND (IN DEMAND (IN
KILO) KILO)
FEET ½ 3 1.5 10.5
HEAD ½ 3 1.5 10.5
INTESTINES ½ 3 1.5 10.5
LIVER ½ 3 1.5 10.5
TOTAL 6 42

E. Supply and demand gap analysis

FIGURE 1. Pork Demand-Gap analysis

The gap of supply and demand for pork is presented above through the use of graphic

presentation. Since the demand for pork has been computed as 1,742 kilos per month, and it has

been clearly determined that the existing business supplies approximately 840 kilos weekly, then

the gap, therefore, is 840, which is 48% of the total demand.

The supply and demand gap for chicken is presented below.

FIGURE 2. Chicken Demand-Gap analysis

 The demand for chicken has been estimated at 1,056 kilos per month and existing supply

of 400 kilos are being supplied by the existing business monthly. The gap is determined to be

400 kilos which is approximately 38% of the total demand for chicken.

The gap for supply and demand regarding those chicken products except chicken meat is

determined to be zero since there is no existing business which offers the said products.

Therefore, this proposed business will be the sole supplier of those products.

F. SWOT analysis

Considering the conditions in the market, Strengths; Weaknesses; Opportunities; and

Threats are determined as follows.

Strength:

• The business will provide fresh and high quality meat from known

suppliers.

• Safety of product will be ensured through the adaption of proper sanitary

measures.

• The business will be located at the center of commerce in San Isidro so it

would be noticeable.

Weaknesses:

• Fluctuation in prices is expected to occur frequently due to the supply and

market conditions, which may decrease demands for products.

Opportunities:
 • There is a growing demand of meat and meat products due to price hike of

other alternative commodities.

• Customers seek products such as liver, intestines, backbones and mask that is

not daily available to the market.

• There are residents of nearby barangays who often visits San Isidro to buy

products for their consumption. They are additional potential customers of

KIARA’s.

• There are barbeque and “ihaw-ihaw” vendors in the target location. This will

generate additional revenue for chicken products used in the said business.

Threats:

• There are certain customers who are loyal to their supplier. That may cause

reduction to number of potential customers.

• Some target customers, due to their health issues, tend to not buy meat

products which may reduce the predicted demand.

G. Market positioning

KIARA’s meat shop will be positioned as an entity offering fresh meat directly from hog

growers, operating in a sanitary environment so as to ensure the safety of the products offered,

catering the demand of the general population of the target market through offering meat

products that is financially competitive in the market.

H. Promotion

This business will use peer to peer advertising technique. KIARA’s will not use media
advertising since it would be costly and impractical given its status as a small scale type of

business. Also, since KIARA’s will be located at the center of commerce in San Isidro, it is

therefore assumed that KIARA’s will be noticeable as to location. As to product offered,

however, the business will use tarpaulins to publicize its products and the prices.

I. Pricing

This business will use competitive based pricing, reflecting the fluctuations of prices due

to the changes in the conditions of the market. Basing on the latest update of prices in the market,

KIARA’s will adapt the following set of prices per kilo.

TABLE 4. List of market prices of products to be offered

PRODUCT PRICE

THIGHS P 180

SPINE 200

LIVER 220

HEAD 180

INTESTINES 180

PORK 220

CHICKEN (Breast, legs, wings) 160

CHICKEN LIVER 160

FEET 70

CHICKEN INTESTINES 70

CHICKEN HEAD 40

J. Distribution channel

All products will be offered at KIARA’s Meat Shop establishment located at Purok 6,

San Isidro, Bulan, Sorsogon. By no other means shall it be distributed.

III. Technical Study

• Production Layout

The production layout of this business will be:

FIGURE 3. Production layout

 The area will in total be 5x7 meters, composed of the display section and counter area.

• Process layout

The process layout for pork is as follows:

• The pork will come originally from hog growers as whole live hog, upon order of

KIARA’s.

• It will then be delivered to the entity for slaughter and splitting off of different parts.

• Following is the storage of products, and waiting for customers’ purchase.

• At purchase, it will directly be given to customers at KIARA’s shop.

The pork process layout is illustrated below.

FIGURE 4. Pork process layout

The process layout for chicken is as follows:

• KIARA’s will be purchasing supply from known suppliers such as Magnolia’s and

other suppliers which is normally delivered directly to the entity.

• It will be stored waiting for customer purchase.

• Upon purchase, it will be given to the customers at KIARA’s shop.

 The chicken process layout is illustrated below.

FIGURE 5. Chicken Process Layout

• Scheduling

This business will be available and open every day except on Sundays. It will be from

7:00 a.m to 7:00 p.m. during Mondays-Saturdays.

Purchasing needed supplies, after the approval of the manager, will be done after every close

of the business to avoid scarcity of stocks.

• Sanitary operation

The quality of KIARA’s products offered is mainly dependent upon the sanitation inside

the business environment since it offers products for human consumption. Lacking sanitary

measures may compromise customer’s health and eventually, the business as a whole. Therefore,

this business shall adopt procedures to ensure the safety of the products offered, and the target

customers as a whole through:

• Proper product storage;

• Maintaining the cleanliness of work space especially the slaughter section;

 • Monthly pest check;

• Recognizing possible fire hazards;

• Recognizing other workplace hazards; and

• Other sanitary procedures.

• Machinery and equipment

The list of machinery and equipment needed to run this meat shop is as follows:

• 3 Commercial Refrigerators

• Digital weighing scale

• Chopping table and knives

• Quality control

Quality of the products and service rendered will be ensured through:

• Choosing the right supplier for the chickens to be sold and hogs to be

slaughtered;

• Hiring knowledgeable slaughterers/butchers to ensure efficiency and

product quality; and

• Monitoring the process inside the business and making sure that the

procedures are being followed.

IV. FINANCIAL STUDY

• Financial Assumptions

• Sales Revenue will increase by 5% annually.

• Credit sales revenue is to be assume at 30% of total sales.

• 80% of credit sales is collected in the year of sale, 15% the following year and 5% is
uncollectible and are to be written off.

• The cost of sales will increase by 3% annually.

• The hog to be slaughtered will be sixty (60) kilos each.

• There would be no ending inventory each year.

• Depreciation will be taken up using straight line method.

• Estimated life of the building is 20 years.

• Estimated useful life of freezers will be ten (10) years, with 3,000 residual value upon
disposal.

• Estimated useful life of digital weighing scale will be five (5) years with no residual
value upon disposal.

• The estimated useful life of fixtures is five (5) years.

• Supplies expense will be P4,000 per month, and will maintain a balance of 4,500
annually.

• Utilities expense will be P8,000 per month

• Labor cost for 2 butchers will be P200 each per slaughter.

• Salaries expense for a selling personnel is P200 a day.

• Repair and maintenance will be P3,000 monthly.

• License and legal expenses will be P5,000 annually.

• Sign boards and product list expenses is P2,500 annually.

• Miscellaneous expenses of P5,000 a month is to be assumed.

 • Renovation cost of 100,000 will be capitalized.

• withdrawals by the owner is estimated to be 100,000 annually.

• Capital Requirements

The owner of KIARA’s will invest an initial capital of P 500,000 for operation

and acquisition of the needed equipment for the said business. Also, the vacant house of

the owner will be invested and renovated with an estimated useful life of twenty (20)

years and a fair market value of P100,000 and a land with an estimated fair market value

of P250,000.

• Financial Breakdown

Cash investment: P 500,000

Expenditures:

Renovation cost 100,000

3 Freezers 91,200

1 Digital weighing scale 6,200

Display table 4,000

Chopping table 3,000

Chopping boards and knives 20,000

Cabinet 2,500 (226,900)

Excess: 273,100
 The excess fund will be used to buy the hogs for slaughter, chicken products and will be

used for the operation of the business.

• Preparation of Complete Set of Financial Statement

KIARA’S Meat Shop

Income Statement

Sales revenue will be generated through the sale of products specified above. The

computation of computed sales is as follows:

PORK PRODUCTS

*Monthly projected sales of pork products (in kilos): 902

Number of month in a year: X 12 `

Annual projected sales for **pork products: 10,824 kilos

 *the projected sales level of pork products was determined through the demand analysis shown in page 5 reduced by
the portion being supplied by the existing business or the gap (1742-840).
**the pork products consist of the different products generated through the split-off process.

The number of hogs to be slaughtered per month is computed as follows:

Monthly projected sales of pork products (in kilos): 902

*Average kilo per hog to be slaughtered: ÷ 55 `

Number of hogs to be slaughtered per month: 16 hogs (rounded off)

* the net kilo of slaughtered hog (60-5).

The revenue per pork product is computed as follows:

PORK MEAT: Kilos per hog slaughtered: 29

Numbers of hogs to be slaughtered X 16 `
Total kilos of pork meat per month 464
*Selling price X P 220
Monthly revenue P 102,080
Number of months in a year X 12
Annual revenue for pork meat P 1,224,960

HEAD: Kilos per hog slaughtered: 5

Numbers of hogs to be slaughtered X 16 `
Total kilos of head per month 80
*Selling price X P 180
Monthly revenue P 14,400
Number of months in a year X 12
Annual revenue for head P 172,800

THIGHS: Kilos per hog slaughtered: 10

Numbers of hogs to be slaughtered X 16 `
 Total kilos of thighs per month 160
*Selling price X P 180
Monthly revenue P 28,800
Number of months in a year X 12
Annual revenue for thighs P 345,600

LIVER: Kilos per hog slaughtered: 2

Numbers of hogs to be slaughtered X 16 `
Total kilos of liver per month 32
*Selling price X P 220
Monthly revenue P 7,040
Number of months in a year X 12
Annual revenue for liver P 84,480

SPINE: Kilos per hog slaughtered: 6

Numbers of hogs to be slaughtered X 16 `
Total kilos of spine per month 96
*Selling price X P 200
Monthly revenue P 19,200
Number of months in a year X 12
Annual revenue for spine P 230,400

INTESTINES: Kilos per hog slaughtered: 3

Numbers of hogs to be slaughtered X 16 `
Total kilos of intestines per month 48
*Selling price X P 180
Monthly revenue P 8,640
Number of months in a year X 12
Annual revenue for intestines P 103,680
*the selling price of each pork product is determined through the market interview and is set in this study as market price of each
product. The pricing scheme can be found in page 10-11.
 The total annual revenue for the pork product is P 2,161,920. See next page for the
computation.

Annual revenue for pork meat P 1,224,960

Annual revenue for head P 172,800

Annual revenue for thighs P 345,600
Annual revenue for liver P 84,480
Annual revenue for spine P 230,400
Annual revenue for intestines P 103,680

TOTAL ANNUAL REVENUE FOR PORK P 2,161,920

CHICKEN PRODUCTS
CHICKEN MEAT:
*Monthly projected sales of chicken meat (in kilos): 656
Number of months in a year: X 12 `
Annual projected sales for chicken meat: 7,872 kilos
*the projected sales level of chicken meat was determined through the demand analysis shown in page 6 reduced by the
existing supply (1056-400).

Monthly projected sales of chicken meat (in kilos): 656

Selling price X P 160
Monthly revenue for chicken meat P104,960
Number of months in a year 12
Annual projected sales revenue for chicken meat P 1,259,520

CHICKEN LIVER:
 Weekly projected sales of chicken liver (in kilos): 10.5
Selling price X P 160
Weekly revenue for chicken liver P1,680
Number of weeks in a year 52
Annual projected sales revenue for chicken liver P 87,360

CHICKEN INTESTINES:
Weekly projected sales of chicken intestines (in kilos): 10.5
Selling price X P 70
Weekly revenue for chicken intestines P 735
Number of weeks in a year 52
Annual projected sales revenue for chicken intestines P 38,220

CHICKEN FEET:
Weekly projected sales of chicken feet (in kilos): 10.5
Selling price X P 70
Weekly revenue for chicken feet P 735
Number of weeks in a year 52
Annual projected sales revenue for chicken feet P 38,220

CHICKEN HEAD:
Weekly projected sales of chicken head (in kilos): 10.5
Selling price X P 40
Weekly revenue for chicken head P 420
Number of weeks in a year 52
Annual projected sales revenue for chicken head P 21,840

The total annual revenue is for chicken products is computed as follows:

Annual projected sales revenue for chicken meat P 1,259,520

Annual projected sales revenue for chicken liver P 87,360

 Annual projected sales revenue for chicken intestines P 38,220

Annual projected sales revenue for chicken feet P 38,220

Annual projected sales revenue for chicken head P 21,840

TOTAL ANNUAL REVENUE FOR CHICKEN PRODUCTS P 1,445,160

The total projected sales revenue is:

TOTAL ANNUAL REVENUE FOR PORK P 2,161,920

TOTAL ANNUAL REVENUE FOR CHICKEN PRODUCTS P 1,445,160
TOTAL PROJECTED REVENUE: P3,607,080

The Cost of Sales for the products is determined to be the cost or the purchase price of

the hog for slaughter, freight cost and direct labor employed to split off the pork products (for

pork products) and the purchase price per delivery of the chicken products.

Through the interview conducted with William Lim store, it was determined that their

purchase price for live hog is one hundred and ten pesos (P 110) per kilo given that the supply is

low. It fluctuates depending upon the supply of hogs, which happens in average of once in three

months. It declines by a maximum of twenty pesos (P 20) when the supply is high. This study

will then use the average of the maximum and minimum purchase price of live hogs which is

[(90+110)/2] one hundred pesos (P100).

The computation of the cost of sales of KIARA’s is presented below.

PORK PRODUCTS:

Monthly number of hogs to be slaughtered 16

Expected kilos per hog X 60

 Monthly number of kilos to be purchased 960

Average purchase price X P 100

Monthly cost of sales P 96,000

Number of months in a year X 12

Annual pork cost of purchase P 1,152,000

Freight cost per purchased hog P 15

*Annual number of hogs to be purchased X 192

Annual freight cost P 2,880

*(16 hogs to be slaughtered a month*12 months)

Monthly number of slaughter 16

Number of months in a year 12 `

Annual number of slaughter 192

*Direct labor cost per slaughter 400 `

Annual direct labor cost 76,800

*(2 butchers*200 labor cost)

TOTAL PORK COST OF SALES P 1,231,680

It was also determined that the purchase price per chicken meat is one hundred and thirty

pesos (P130) per kilo which is usually delivered by the supplier, thus, no freight payments

necessary.

CHICKEN PRODUCTS:

CHICKEN MEAT:

Monthly projected chicken meat consumption (in kilo) 656

Purchase price per kilo X P 130

Monthly cost of sales of chicken meat P 85,280

Number of months in a year X 12

Annual cost of sales of chicken meat P 1,023,360

CHICKEN LIVER:

Weekly projected chicken liver consumption (in kilo) 10.5

Purchase price per kilo X P 130

Weekly cost of sales of chicken liver P 1,365

Number of weeks in a year X 52

Annual cost of sales of chicken liver P 70,980

CHICKEN FEET:

Weekly projected chicken feet consumption (in kilo) 10.5

Purchase price per kilo X P 50

Weekly cost of sales of chicken feet P 525

Number of weeks in a year X 52

Annual cost of sales of chicken feet P 27,300

CHICKEN INTESTINES:

Weekly projected chicken intestines consumption (in kilo) 10.5

Purchase price per kilo X P 50

Weekly cost of sales of chicken intestines P 525

Number of weeks in a year X 52

Annual cost of sales of chicken intestines P 27,300

CHICKEN HEAD:
 Weekly projected chicken intestines consumption (in kilo) 10.5

Purchase price per kilo X P 20

Weekly cost of sales of chicken intestines P 210

Number of weeks in a year X 52

Annual cost of sales of chicken intestines P 10,920

TOTAL CHICKEN COST OF SALES P 1,159,860

TOTAL PORK COST OF SALES P 1,231,680

TOTAL CHICKEN COST OF SALES P 1,159,860

TOTAL ANNUAL COST OF SALES P 2,391,540

Depreciation for building, freezers, weighing scale, and fixtures will be based upon their

depreciable amount after deducting residual value and divided by their useful life. The annual

depreciation expense for such items are presented and computed below.

DEPRECIATION FOR BUILDING:

Building Market Value 100,000

Renovation cost 100,000 `

Total 200,000

Residual value (0) `

Depreciable amount 200,000

Useful life ÷ 20 years `

Annual Depreciation 10,000

DEPRECIATION FOR FREEZERS:

Purchase price 91,200

 Residual value (3,000) `

Depreciable amount 88,200

Useful life ÷ 10 years `

Annual Depreciation 8,820

DEPRECIATION FOR WEIGHTING SCALE:

Purchase price 6,200

Residual value (0) `

Depreciable amount 6,200

Useful life ÷ 5 years `

Annual Depreciation 1,240

DEPRECIATION FOR FIXTURES:

*Purchase price 29,500

Residual value (0) `

Depreciable amount 29,500

Useful life ÷ 5 years `

Annual Depreciation 5,900

*(Display table - 4,000; Chopping table -3,000; Chopping boards and knives -20,000; Cabinet-
2,500)

Salaries expense pertains to wage to be paid to the selling personnel of Kiara’s and is to

be computed through days in a year times the wage rate per day. It is presented below.

SALARIES EXPENSE:

Wage rate 200

 Number of days in a year 365 `

Annual salaries expense 73,000

Bad debts expense is the portion of the credit sales that is deemed to be uncollectible. it

is computed as follows:

BAD DEBTS EXPENSE:

Annual Sales (year 1) 3,607,080

Credit sales rate 30%

Annual Credit Sales 1,082,124

Bad debt expense rate 5%

Bad debts expense (year 1) 54,106

Annual Sales (year 2) 3,787,434

Credit sales rate 30%

Annual Credit Sales 1,136,230

Bad debt expense rate 5%

Bad debts expense (year 2) 56,812

Annual Sales (year 3) 3,976,806

Credit sales rate 30%

Annual Credit Sales 1,193,042

Bad debt expense rate 5%

Bad debts expense (year 3) 59,652

Annual Sales (year 4) 4,175,646

 Credit sales rate 30%

Annual Credit Sales 1,252,694

Bad debt expense rate 5%

Bad debts expense (year 4) 62,635

Annual Sales (year 5) 4,384,428

Credit sales rate 30%

Annual Credit Sales 1,315,328

Bad debt expense rate 5%

Bad debts expense (year 5) 65,766

All other values operating expense such as Supplies, Utilities, Legal and License,

Repair and Maintenance, and Miscellaneous expenses are based on the accounting

assumptions presented on page 16.

The projected Statement of Changes in Equity of KIARA’s is presented below.

KIARA’S Meat Shop

Statement of Changes in Equity

*the investment in the first year is the total of the 500,000 cash investment, land with 250,000 estimated
fair value, and a vacant house with estimated fair market value of 100,000.

The projected Statement of Cash Flows of the business is as follows.

KIARA’S Meat Shop

Statement of Cash Flows

*Cash sales is computed as 70% of the total sales.

*Credit sales collected is 30% of the total sales multiplied by 80% for the first year. For second year and
following years, it was computed as 30% of the total sales multiplied by 80% plus the receivable balance for the
previous year collected during the year.
*Cost of sales is the computed cost of sales multiplied by the growth rate of 3% annually.
*Net cash flows is the total of the operating, investing, and financing cash flows.

The Statement of Financial Position of KIARA’s is presented below

KIARA’S Meat Shop

Statement of Financial Position

To evaluate the profitability of this proposed business, Return on Investment (ROI)

analysis is used. The computation for the ROI in its five years of operation is presented below:
 Payback period is the length of time needed to fully recover the initial investment. In

this proposed business, the payback period computed using the data presented above is

approximately 1 year form the start of its operation. It is presented below.

IV. Legal and Management Study

A. Nature of the Business

KIARA’s meatshop will register as a single proprietorship with the Local Government

Unit (LGU) of Bulan, the Department of Trade and Industry (DTI) and the Bureau of Internal

Revenue.

B. Organizational Structure

The figure below shows the organizational chart of KIARA’s meat shop.
C. Job Specification and Responsibilities of Personnel

MANAGER Owner of the proposed business

Implements policies

Monitoring the activities inside the entity

Responsible for complying legal requirements

Cash and other assets management

Purchase of Hogs and other products and supplies

SALES PERSON

QUALIFICATIONS:

Must be high school graduate

Female

18 years old and above

RESPONSIBILITIES:

Selling products

Safe-keeping of cash receipts until the end of business day

Recording of sales and receivables

Keeping the workplace clean

BUTCHERS

QUALIFICATIONS:
 Must have experience in butchery

Must be 18 years old and above

Male

RESPONSIBILITIES:

Purchasing live hogs

Slaughter and split-off process of hogs

Delivery of split-offed products for storage

D. Socio-Economic and Environmental Aspects

This deals with the impact of the establishment of this proposed product to the market

and its effect with the socio-economic and environmental aspect of the municipal government

and the public. The following are the benefits of KIARA’s meat shop:

Proponent. The establishment of KIARA’s will, if profitable as projected, benefit the

owner through the generation of profit and a return of capital in a short period of operation.

The market. This will benefit the general public through the supply of products which

do not exist in the market and additional supply of those that already do.
 The community. This business will provide job opportunities in the community.

The government. Generation of income is not only favorable to the owner but to the

government as well. This will provide additional revenue to the government through the tax to be

paid by the operator of the proposed business.

E. Waste disposal

The proposed business will not be focused on economic aspects but to environment as

well. The waste generated though the processes of this proposed business will be well segregated

and disposed off properly in accordance with the local regulations of the Barangay.