Business Model Formulation: Cost, Revenue, Farmers Income PDF

BUSINESS MODEL FORMULATION COST, REVENUE, FARMERS INCOME  Production Cost (direct and indirect) 7. WHAT ARE THE COST Basis of Costs and Assumptions INVOLVED ? Capital expenditures, operating expenses  COSTING:...

BUSINESS MODEL FORMULATION COST, REVENUE, FARMERS INCOME  Production Cost (direct and indirect) 7. WHAT ARE THE COST Basis of Costs and Assumptions INVOLVED ? Capital expenditures, operating expenses  COSTING: SALES - COST OF GOODS SOLD = GROSS PROFIT – SELLING & ADMINISTRATIVE EXPENSE = NET PROFIT COST OF GOODS SOLD = Direct Materials + Direct Labor + Production Overhead – Ending Inventory SELLING AND DIRECT MATERIALS ADMINISTRATIVE Direct materials EXPENSES OVERHEAD COST INDIRECT LABOR Accounting Clerks Indirect labor Cluster managers Sales and Warehouse Packaging Cost Drivers and Helpers Supervisors DIRECT LABOR Fuel Expense Light and Water Weighing/Classifying/ Electric al expense (machineries, Communication Fermentation Staff equipment, truck) Production supplies Office Supplies Drying Personnel Repairs and maintenance Meetings & conferences Sorting & Classifying (machineries, equipment, truck) Travelling expenses Personnel Depreciation cost Packaging Personnel Depreciation expense Office Facilities & Equipment  SETTING-UP FINANCIAL ASSUMPTIONS It composed of the following: – Organizational assumptions – Marketing assumptions Employees and their positions Products Salaries Market Demand and supply Prices – Financial assumptions Sources of funding (Equity – Production assumptions and Debts) Production process Capacity of the machineries Cost of capital and equipment Depreciation Production schedule Inflation rate Volume of production Source of your materials Taxes Replacement schedule Production costs  SAMPLES: 1. WORKING CAPITAL CYCLE 15 RECOVERY RATES: Percentages Particulars No. of Days Hauling / Receiving of Wet Cacao Beans 1 Hauling 100% Fermentation of Wet Cacao, kgs. 6 Fermentation 79% Drying of fermented cacao,kgs. 5 Drying 47% Sorting/Classifying/Weighing 1 Storage/Packaging of Fermented DC beans, kgs. 1 Sorting and Bagging 91.50% Delivery of Fermented DC beans 1 Storing; Delivery 100% Particulars Year 1 Volume of Cacao Hauled (Kg) 2,120 Multiply by: Recovery Rate after Fermentation 79% Particulars Year 1 Year 2 Input for Drying (Kg) 1,675 No. of Trees/Ha 600 600 Multiply by: Recovery Rate after Drying (Kg) 47% No. of Pods per Tree 41 43 Volume of Fermented Dried Cacao Beans per Batch (Kg) 787 Pods : 1kg Wet Beans Multiply by: Recovery Rate after Sorting/Packing 91.5% 7.7 7.7 Ratio Production Volume per Batch (Kg) 720 Assumed Percentage Multiply by: No. of Batches Finished per Year 173 70% 70% to be Supplied to PG Annual TITLE Production Volume of Fermented Dried Cacao Beans (Kg) 124,627 PRESENTATION 20XX 5 HISTORICAL PRICING OF THE FINAL PRODUCT (DRIED CACAO BEANS): YEAR 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Average price of Dried 102.79 129.04 100.93 103.72 135.88 143.00 137.00 102.00 121.00 121.00 Cacao Beans per Kg. 26% -22% 3% 31% 5% -4% -26% 19% 0% 3.52% Projected Selling Price of the final product: 3.52% +100% = 1.0352 Projection increase is based on the trend of pricing from ICCO. Year 1 Year 2 Year 3 Computation on year 121.00 125.25 129.66 2: 121 X 1.0352 = 125.25 20XX 6  H I S T O R I C A L P R I C I N G O F T H E R AW M AT E R I A L S ( W E T C A C A O BEANS): Pegged at PhP30.00 per kilogram based on the prevailing market rate in the area. Projected to increase is based on the trend of pricing from ICCO. 1.03516 2017 2018 2019 2020 Historical Price Annual Annual Annual Annual Wet Cacao Beans 29.00 29.00 30.00 30.00 BUYING PRICE per KG of WET CACAO BEANS FROM PRODUCERS: Year 1 Year 2 Computation on year 2: 30.00 31.05 30.00 x 1.03516 = 31.05 7  MINIMUM DAILY WAGE RATE Year 1 Year 2 Production Workers 316.00 326.35 Projected Annual Increase 1.03275 REPAIRS and MAINTENANCE Provision of R & M for Assets Building and 10% of the Depreciation Structures Production 2% of the Acquisition Cost Equipment, Tools & Fixtures COSTS - Projections 1.03275 Assets Year 1 Year 2 Year-on-Year Changes of the Consumer Price Index in Percent by Commodity Group Fermentary Boxes (250kg/ box) 4,345.00 4,487.30 (2012=100): January 2012 - June 2019 Drying Facility cost/ sq.m 9,354.17 9,660.52 Particulars 2015 2016 2017 2018 Average Weighing Scale (10kg) 2,200.00 2,272.05 Weighing Scale (100kg) 6,400.00 6,609.60 Region IX Weighing Scale (500kg) 21,700.00 22,410.68 ALL ITEMS 1.8 2.1 3 6.2 3.275 Source: PSA, 2019 20XX 8  OPERATIONAL FLOW OF THE BUSINESS Legen No. of days Persons involved: PROCESS FLOW d: per batch Hauling husk from Station to the Coconut farmer, Driver, Processing Center and Delivering of Coir Helper from the processing center to the station 2 Decorticator, Asst. Decortication, Segregating Peat and Decorticators, Separators Carding of Coco Coir 2 Twiner Twining of coco coir 2 Gathering of twines from farmers to the Twiner, Driver, Helper Station, Inspection and Payment of twines 2 to farmers and Hauling of twines to center Weavers, Manager Weaving & Final Inspection/Storage 3 Driver, Helper Marketing 1 Part time worker Rest Day/ Delivery of Coco Peat 1 GANTT CHART 8. WHAT ARE THE REVENUES? SOURCES OF COMPARE INCOME REVENUES S A L E S T O N E T P R O F I T: Projected Sales - Fermented Dried Cacao Beans (FACOMA) Particulars Month 1 Annual Production Volume of Fermented Dried Cacao Beans (Kg) 5,763 Multiply by: Selling Price per Kg (PhP) 121.00 Projected Sales - Fermented Dried Cacao Beans (PhP) 697,332.71 Projected Sales - Fermented Dried Cacao Beans (POEMCO) Particulars Month 1 Annual Production Volume of Fermented Dried Cacao Beans (Kg) 2,297 Multiply by: Selling Price per Kg (PhP) 121.00 Projected Sales - Fermented Dried Cacao Beans (PhP) 277,889.14 Projected Sales - Fermented Dried Cacao Beans (PIMPCO) Particulars Month 1 Annual Production Volume of Fermented Dried Cacao Beans (Kg) 7,468 Multiply by: Selling Price per Kg (PhP) 121.00 Projected Sales - Fermented Dried Cacao Beans (PhP) 903,599.47 Summary of Projected Sales (PhP) Proponent Group Month 1 FACOMA 697,332.71 POEMCO 277,889.14 PIMPCO 903,599.47 Total Projected Sales 1,878,821.31 12 CONTINUATION: SALES TO NET PROFIT Particulars Month 1 Sales 1,878,821.31 Less: Cost of Goods Sold 1,651,823.50 Gross Profit 226,997.81 Less: Selling and Administrative Expense 80,243.12 Net Profit 146,754.70 Particulars Month 1 SELLING and ADMINISTRATIVE EXPENSES Direct Materials 2,570,849.13 Particulars Monthly Salaries and Wages 75,416.25 Add: Direct Labor 116,698.87 Light and Water 795.20 Production Overhead 409,621.06 Communication 500.00 Goods Placed in Process 3,097,169.06 Office Supplies 125.00 Add: Work-in-Process Inv., Beg. 0.00 Meetings and Conferences 333.33 Total Goods Placed in Process 3,097,169.06 Travelling Expenses 625.00 Subtotal 77,794.78 Less: Work-in-Process Inv., End 1,445,345.56 Add: Depreciation 2,448.33 Total Cost of Goods Sold 1,651,823.50 Total 80,243.12 13  1. Direct Sales of Produce 2. Value Addition H OW C AN T H E 3. Cooperative Ventures FA R M E R S E AR N FR OM T H E 4. Agri-Tourism E N T E R P R IS E ? 5. Contract Farming 6. Organic or Specialty Farming 7. Diversification 8. Government and NGO Support 9. Access to Export Markets 10. Climate-Resilient Farming THANK YOU!