SECTION 2: PRODUCTION PLAN

Chart 2.1 Akapulko Face and Body Scrub Flow of Production

Start

Inspection of Materials

(30 minutes)

Extraction of Akapulko Juice

(30 minutes)

Mixing of Akapulko Juice, sugar,

organic coconut soap base,

shea butter

(10 minutes)

Packaging of Akapulko Face

and Body Scrub

(30 minutes)

Inspection of Machineries

(10 minutes)
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2.1 Production Process

Production shall be done every day where in there are 5 batches a day

and in every batch produced 50 units for a total of 250 units. The enterprise

operates six days a week and shall be open from 8 am to 5 pm.

1. Preparation and Extraction (30 mins.)

The akapulko leaves juice shall be extracted.

The raw ingredients for the product are akapulko leaves, organic

coconut soap base, shea butter and sugar. The juice of the

akapulko leaves shall be extracted first in a maximum of 30

minutes per batch.

2. Mixing (10 mins.)

The organic coconut soap base and shea butter are mixed

together through a mixing machine until it becomes foamy. Then

add the akapulko juice and sugar. The mixture is stirred for at

least 10 minutes.

3. Labeling/Packaging/Scaling (30 mins.)

After extracting the juice of Akapulko leaves, and mixing

together the ingredients the Face and Body Scrub is ready or

packaging which will take 30 minutes per batch.

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2.2 Fixed Capital

Table 2.1: Cost of Machineries

Quantity Particulars Unit Cost Cost

3 Juice Extractor ₱ 3,000.00 ₱ 9,000.00

1 Mixing Machine 25,000.00 25,000.00

1 Pckaging Machine 90,000.00 90,000.00

1 Computer 20,000.00 20,000.00

1 Printer 4,600.00 4,600.00

6 CCTV 5,000.00 30,000.00

1 Telephone 950.00 950.00

Total ₱ 179,550.00

Figure 2.1: Juice Extractor

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Specification:

 Five speeds juice a variety of produce

 3" large feed tube saves prep time

 Durable, dependable blades easily grind skins and rinds

 1000 watts for strong and smooth operation

 Centrifugal technology means fast juicing

 1-liter juice pitcher for serving or storing

 Large pulp container allows uninterrupted juicing

 Exclusive foam management filter disk helps preserve nutrients

 Easy assembly offers convenience

 Top-shelf dishwasher safe for speedy cleanup

Figure 2.2: Mixer

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Specification:

• 80 kg/131 l Capacity

• Transmission with referral on the spiral, ideal for mixtures with more than 55%

moisture

• Bowl with large radius, perfect for baking.

• Belt transmission.

• 2 motors, 2 speeds with automatic change, 2 digital timers and reversible bowl.

• Spiral arm speed 200/100 rpm, bowl speed 14 rpm.

• Bowl, spiral, and the central column in stainless steel for higher strength.

Figure 2.3 Packaging Machine

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Specification:

 Filling

 6 dosing cylinders in stainless steel AISI 316 L and seals made with FDA

approved material

 6 nozzles with closing pneumatic system

 Connections with CLAMP coupling

 50 liters product unloading hopper made of stainless steel AISI 316

 Capping

 1 capping head with adjustable loading spring and ejection cylinder

 Pick & Place system with pneumatic gripper and transfer on slide

 Vibrating caps chute to maintain the caps oriented

Figure 2.4: Computer

Specification:

 Operating System: Windows 10 Home

 Memory: 4GB

 1TB HDD
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 Intel HD Graphics

 Includes Dell 22" Monitor

 DVDRW Optical Drive

 Includes Dell Wired Keyboard & Mouse

Figure 2.5: Printer

Specification:

 Print, Scan, Copy

 Print Resolution: 4800 x 1200 dpi

 Maximum Print Size: 8.5 x 14"

 Print Speed: 7.7 ipm Black / 4 ipm Color

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Figure 2.6: CCTV

Specification:

 Dual Antenna

 Easy plug and play

 Remote pan and tilt

 Inbuilt 64GB memory

Figure 2.7: Telephone

Specification:

 2-step ringer volume control

 Electronic handset volume control (4 steps)

 Color: White (W) / Black (B)

 No lead, mercury and other harmful chemicals are used

 W al l - m o un ta bl e
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 S e l ec ta bl e pa us e / to n e d i al i n g

 O n e - to uc h r e d ial

2.3 Life of Fixed Capital

The useful life of an asset is the length of time an asset can be

productively used in operations. Keep in mind that this is not the amount of time

an asset continues to run or remain useable but the amount of time a business

can productively use the asset.

Table 2.2 Useful Life of Machineries

PARTICULARS USEFUL LIFE (YEARS)

Extracting Machine 10 years

Mixing Machine 10 years

Packaging Machine 10 years

Computer 5 years

Printer 5 years

CCTV 5 years

Telephone 5 years

2.4 Maintenance and Repairs

Maintenance preserves the value of the equipment. Keeping machines in

good working order extends equipment life, keeps operators safe, and ensures

the availability of the machine. In relation to this, regular maintenance of the

equipment like simple cleaning will be done weekly. Thorough maintenance

check-up will be done semi-annually, where the machines will be checked

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carefully, to ensure smooth operations and any inspected damages will be

repaired immediately.

2.5 Sources of Equipment

Table 2.3 Sources of Equipment

Equipment Source Location

SM Appliance SM City Baguio, Luneta

Hill, Upper Session Rd.,

Baguio City

SM Appliance SM City Baguio, Luneta

Hill, Upper Session Rd.,

Baguio City
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8319 Diamond,

Caloocan, Metro
ELGIE
Manila
Packaging

Equipment,

Inc

2.6 Planned Capacity

Table 2.4: Computation of Working Days

Days in a year 365

Less: Weekends 52

Holidays 17

Total number of working days 296

Table 2.5: Planned Capacity

Number of Production Hours in a day (in mins.) 400

Process time/batch (in mins.) 80

Number of batches per day 5

Number of units per batch 50

Daily Production 250

Number of operating days in a year 296

Annual Planned Capacity 74,000

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Planned capacity is the capacity used in evaluating requirements for a

given material planning period. The planned capacity is calculated using the

formula below.

Capacity = (number of batches per day x pieces per batch x number of

working days)

The normal capacity includes the machine’s temporary additions or

downtime for scheduled maintenance, etc.

2.7. Future Capacity

Table 2.6: Projected Future Capacity

Number of Production Hours in a day (in mins.) 400

Process time/batch (in mins.) 80

Number of batches per day 5

Number of units per batch 50

Daily Production 250

Number of operating days in a year 365

Annual Future Capacity 91,250

2.8. Terms and Conditions of Purchase of Equipment

There will be two sources of funds for the business which will be used to purchase

the equipment. First one is the contributions from partners or personal

investments either with cash, or with collateral of assets. This proves investors and

bankers that the business have long-term commitment to the project and that it
 P r o d u c t i o n P l a n | 42

is ready to take risks. The second is the bank loans which are the most commonly

used source of funding for small and medium-sized businesses. With these funds,

the equipment will be paid in full during purchase to avoid interest charges and

therefore minimize expenses.

2.9 Factory Location and Layout

The factory will be located at Legarda Road Baguio City.

Figure 2.8: Plant Location

Figure 2.9: Plant Layout

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Figure 2.10: Floor Plan

2.10 Raw Materials

Raw materials are commodities that trade on the futures market which

determines the quality and cost of producing an item. For the product Akapulko

Face and Body Scrub the materials needed are 60 packs of Akapulko Leaves,

15Kg of Sugar, 30g of Shea Butter, and 15kg of Coconut Soap Base and 250ml

Essential Oil per day.

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2.11 Cost of Raw Materials

Acquiring raw materials at a good price makes the difference between having

a profitable year and having an unprofitable year. The business has found a

good quality raw materials at a lowest possible price to meet the standards and

the purchasing power of the target market.

Table 2.7 Direct Material Cost

DIRECT MATERIALS
TOTAL NO.
PER ANNUAL
QUANTITY OF UNITS DAILY
ITEMS UNIT COST
PER DAY PRODUCED COST
COST (296 DAYS)
PER DAY
Akapulco 50 packs ₱ 22.45 ₱ 22.45 250 ₱ 5,612.50
Leaves
12 kg 2.00 2.00 250 500.00
Sugar
Shea 25 g 10.00 10.00 250 2,500.00
Butter
Coconut 12 kg 20.00 20.00 250 5,000.00
Soap Base
Essential 200 ml 5.84 5.84 250 1,460.00
Oil
₱ 60.29 ₱ 15,072.50
TOTAL DM

2.12 Raw Materials Availability

The raw materials availability is another factor that the proponents should

consider in determining whether the business could produce the desired product

on time and at a desired level of units to be produced. Since the raw materials

can be produced and acquired within the country, the proponents find no

difficulties in finding possible suppliers. Also, the suppliers operate annually and

are expected to be able to produce enough materials to all of their customers

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throughout each year. In case of shortage from the stocks of the chosen

suppliers, the proponents should purchase from other suppliers around the

country. The succeeding table shows the target supplier of the business and its

location.

2.13 Labor

Labor is a primary factor of production; it is the aggregate of all human

physical and mental effort used in creation of goods and services. The size of a

nation's labor force is determined by the size of its adult population, and the

extent to which the adults are either working or are prepared to offer their labor

for wages. For the production of the finished product, four (4) Production Worker

and one (1) production supervisor who ensures that the manufacturing

processes run reliably and efficiently.

2.14 Cost of Labor

Labor costs is the total cost of all labor used in the business which is one of

the most substantial operating costs. These are particularly important in

manufacturing the product for the business have partially non-automated

operations. The tables below show the cost of labor in producing a specified unit

of finished goods.
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Table 2.8: Summary of Direct Labor

GROSS DEDUCTIONS
EMPLOYEES TOTAL NET PAY
EARNINGS SSS PHILHEALTH HDMF
Production
₱ 8,320.00 ₱ 340.00 ₱ 137.50 ₱ 166.40 ₱ 643.90 ₱ 7,676.10
Worker 1
Production
8,320.00 340.00 137.50 166.40 643.90 7,676.10
Worker 2
Production
8,320.00 340.00 137.50 166.40 643.90 7,676.10
Worker 3
Production
8,320.00 340.00 137.50 166.40 643.90 7,676.10
Worker 4
TOTAL ₱33,280.00 ₱1,360.00 ₱ 550.00 ₱665.60 ₱2,575.60 ₱30,704.40

Table 2.9: Summary of Indirect Labor

MONTHLY DEDUCTIONS
TOTAL NET PAY
EMPLOYEES EARNINGS SSS PHILHEALTH HDMF
Production
₱10,000.00 ₱ 400.00 ₱ 137.50 ₱ 200.00 ₱ 737.50 ₱ 9,262.50
Supervisor
Sales
8,320.00 340.00 137.50 166.40 643.90 7,676.10
Personnel
TOTAL ₱18,320.00 ₱ 740.00 ₱ 275.00 ₱ 366.40 ₱1,381.40 ₱16,938.60

The table shows the summary of the employees’ net pay per month.

Table 2.10: Summary of Salaries Annually

EMPLOYEES NET PAY ANNUAL NET PAY

Production Worker 1 ₱ 7,676.10 ₱92,113.20

Production Worker 2 7,676.10 92,113.20
Production Worker 3 7,676.10 92,113.20
Production Worker 4 7,676.10 92,113.20
Production Supervisor 9,262.50 111,150.00
Sales Personnel 7,676.10 92,113.20
TOTAL ₱ 47,643.00 ₱571,716.00
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The workers’ salaries are on a monthly basis and are according to their

position. The deductions required by the law like: employees’ SSS contributions,

Phil Health contributions and PAG-IBIG contributions are shown on the table

above and to show the computations of each employee’s monthly and annual

net pay.

2.15 Labor Availability

The availability of a qualified workforce is typically the primary site

selection driver after the company has assessed its logistics network. Currently,

there are numbers of unemployed person in Baguio City who are searching for

job opportunities to practice their profession and unveil their talents and skills.

However, the proponents must take a prudent approach and integrate best-in-

class assessment in hiring from the large set of candidate communities since they

are valuable for the success of the production process. This increased

production activity continues to suppress the unemployment rates of Baguio

City.

2.16 Labor Productivity

As new manufacturing business, investing in the workforce to hire the

most qualified employee for the success of operation is what the proponents

wish. However, the business wants employees to maximize their time on their

assigned jobs to be more productive. To maintain the numbers of qualified

workers, the business will treat the employees as its valuable clients to motivate

them in their work and perform accordingly. Nevertheless, employee’s fault and
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negligence have an equitable consequence to keep them from committing

such mistake again. This kind of approach would help them as they grow in the

industry to be more responsible for their actions and be committed to their

designated task.

2.17 Factory Overhead Expenses

Manufacturing overhead (also known as factory overhead, factory

burden, production overhead) involves a company's factory operations. It

includes the costs incurred in the factory other than the costs of direct materials

and direct labor. This is the reason that manufacturing overhead is often

classified as an indirect cost.

Table 2.11: FOH-Indirect Materials

Quantity
Indirect Materials Unit Price Total Cost
(Annually)

Container (150mL) ₱ 12.00 88,800 ₱ 1,065,600.00

Sticker Paper 3.00 44,400 133,200.00

Boxes 15.00 144 2,160.00

Packaging tape 50.00 60 3,000.00

Ink 25.00 12 300.00

Ballpen 50.00 12 600.00

Coupon Bond 152.00 12 1,824.00

Stapler 80.00 12 960.00

Stapler Wire 39.00 12 468.00

Total Indirect Materials ₱ 1,207,644.00

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Table 2.12: FOH-Factory Supplies

Quantity
Factory Supplies Unit Price (Annually) Total Cost
Lab Gown 500.00 4 ₱ 2,000.00
Mask 150.00 12 1,800.00
Gloves 160.00 24 3,840.00
First Aid Kit 310.00 2 620.00
Hair Net 334.00 1 334.00
Total Factory Supplies ₱ 8,594.00

Table 2.13: FOH-Indirect Labor

MONTHLY DEDUCTIONS TOTAL NET PAY

EMPLOYEES EARNINGS SSS PHILHEALTH HDMF
Production
₱10,000.00 ₱400.00 ₱ 137.50 ₱200.00 ₱737.50 ₱ 9,262.50
Supervisor
Sales
340.00 137.50 166.40 643.90 7,676.10
Personnel 8,320.00
TOTAL-IDL ₱18,320.00 ₱740.00 ₱ 275.00 ₱366.40 ₱1,381.40 ₱16,938.60
ANNUALLY ₱203,263.20

Table 2.14: FOH-EC-Contribution

Employers Contribution- FOH

PHILHEAL Total
Direct Labor SSS PAG-IBIG
TH Monthly Annually
Production
₱ 599.70 ₱ 137.50 ₱ 160.00 ₱ 897.20 ₱ 10,766.40
Worker 1
Production
599.70 137.50 160.00 897.20 10,766.40
Worker 2
Production
599.70 137.50 160.00 897.20 10,766.40
Worker 3
Production
599.70 137.50 160.00 897.20 10,766.40
Worker 4
INDIRECT LABOR 599.70 137.50 160.00 897.20 10,766.40
Production
599.70 137.50 160.00 897.20 10,766.40
Supervisor
Sales Personnel 680.00 137.50 160.00 977.50 11,730.00
Total ₱2,880.00 ₱ 550.00 ₱ 720.00 ₱ 4,150.00 ₱ 49,800.00
Total Employers
₱5,600.00 ₱1,100.00 ₱ 1,360.00 ₱ 8,060.00 ₱ 96,720.00
Contribution
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Table 2.15: FOH-Utilities expense

Utilities Expense Monthly Cost Annual cost

Electricity – Factory ₱ 4,000.00 ₱ 48,000.00
Water – Factory 1,000.00 12,000.00
Total Utilities Expense ₱ 5,000.00 ₱ 60,000.00

Table 2.16: FOH-Depreciation Expense

DEPRECIATION EXPENSE
Machineries Annually
Juice Extractor ₱ 1,800.00
Mixing Machine 2,500.00
Packaging Machine 9,000.00
Computer 4,000.00
Printer 920.00
CCTV 6,000.00
Telephone 190.00
Total Depreciation of Machineries ₱ 24,220.00
Furniture and Fixture
Long Table 428.57
Monoblock 148.57
Drawer 285.71
Total Depreciation of furniture and fixture ₱ 862.86
Total Depreciation expense ₱ 25,082.86

Table 2.17: Summary of Factory Overhead

FACTORY OVERHEAD
Indirect Materials ₱ 1,007,844.00
Indirect Labor 203,263.20
Factory Supplies 8,594.00
EC-Contributions 96,720.00
Utilities Expense 60,000.00
Depreciation 25,082.86
Total ANNUAL FOH ₱ 1,453,104.06
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Table 2.18 Production Cost

PRODUCTION COST
TOTAL
₱ 4,461,460.00
DIRECT MATERIALS
368,452.80
DIRECT LABOR
1,453,104.06
FACTORY OVERHEAD
Total Production Cost ₱ 6,283,016.86
Divided by: Units Produced 74,000
PRODUCTION COST PER UNIT ₱ 84.21