CHAPTER 7

COST ESTIMATION

300
 CHAPTER 7
COST ESTIMATION

I. Total Capital Investment

An investment is needed as the capital cost to manufacture products. The

total capital investment of a chemical plant is the summation of the fixed-capital

investment, and the working capital.

For a collagen manufacturing plant with a capacity of 378 MT/year,

operating at 270 days/year, the total capital investment reached an amout of Php

246,471,312.51 comprising of 93.87% fixed capital investment and 6.13% working

capital amounted to Php 231,370,036.02 and Php 15,101,276.49, respectively. The

fixed capital investment was determined from the total direct production cost and

indirect production cost. The total direct production cost consist of 21.93%

purchased equipment delivered, 8.55% installation, 5.70% instrumentation and

control, 6.80% piping system, 2.19% electrical system, 6.36% building, 2.63% yard

improvement, 12.06% service facilities and the total indirect cost which is

comprised of 7.02% engineering and supervision, 7.46% construction expenses,

0.88% legal expenses,4.17% contractor’s fee and 27.64% contingency. The Fixed

Capital Investment which represents the amount necessary for the complete cost

and installation of the process equipment I computed based on the major equipment

being designed in the previous chapter namely, Pepsin Digester, Salt-Out

Crystallizer, Decanter Centrifuge, and Freeze Drier. It is assumed that the cost of

the other equipment is 20% of the cost of these four major equipment. The working

301
capital necessary to finance plant operation was computed and added to the fixed

capital investment to get the total capital investment.

The selling prices of the designed equipment are obtained from trusted

Chemical Engineering resources and textbooks. Present costs are computed based

on Marshall and Swift Indexes to take into consideration the economic impact to

the price up to the present. Thus, in this design;

Fixed Capital Investment = Php 231,370,036.02

Working Capital = Php 15,101,276.49
Total Capital Investment = Php 246,471,312.51

302
II. Total Production Cost

Determination of the total product cost per kilogram of the product is

necessary in order to know if the given design will yield a considerate amount of

profit. It is determined from the manufacturing cost, which may also be referred to

as operating or production cost that includes variable production cost, fixed

charges, and plant overhead cost, and from the general expenses. Considering one

kilogram of collagen, the calculated total production cost is Php 288.57 which was

obtained from adding the manufacturing cost and the general expenses.

In the manufacturing cost, the calculated amount of the total direct cost is

Php 196.88 which is the sum of cost of the raw materials amounting to Php 146.45,

operating labor of Php 24.08, direct supervisory and clerical labor of Php 3.62,

utilities of Php 9.25, maintenance and repair of Php 8.58, operating supplies of Php

1.29, and laboratory charges of Php 3.61. The fixed charges calculated is Php 16.49

which is obtained by adding the depreciation worth of Php 11.92, local taxes of Php

3.58 and insurance of Php1.00. The plant overhead cost is also included and it

amounts to Php 21.77.

The General Expenses amount to Php 53.43. This amount is the summation

of the administrative cost of Php 7.26, Distribution and Marketing cost of Php 31.74

and Research and Development cost of Php 14.43.

Manufacturing Cost = Php 235.14

General Expenses = Php 53.43
Total Production Cost = Php 288.57

303
 The current selling price of a 92% purity food grade hydrolyzed collagen in

the market according to PureBulk, a manufacturer of hydrolyzed collagen based in

USA, is 36 USD or Php 1,800 per kilogram. Since the computed TPC is lower than

the current selling price, henxce, it is safe to say that the proposed plant will be

profitable.

304
III. SUMMARY OF COST ESTIMATION

TOTAL CAPITAL INVESTMENT

Plant Capacity: 1400 kg collagen daily

Plant Operation: 24 hours/day
Dollar Exchange: 1 USD = Php 50.59

A. Direct cost
Cost (Php) Exhibit %
Purchased Equipment Delivered Php 54,058,419.63 A 21.93%
Installation Php 21,082,783.66 B 8.55%
Instrumentation and Control Php 14,055,189.10 C 5.70%
Piping System Php 16,758,110.09 D 6.80%
Building Php 15,676,941.69 E 6.36%
Electrical System Php 5,405,841.96 F 2.19%
Yard Improvement Php 6,487,010.36 G 2.63%
Service Facilities Php 29,732,130.80 H 12.06%
Total Direct Cost Php 163,256,427.28 66.24%

B. Indirect cost

Engineering and Supervisor Php 17,298,694.28 I 7.02%

Construct Expenses Php 18,379,862.67 J 7.46%
Legal Expenses Php 2,162,336.79 K 0.88%
Contractor's Fee Php 10,271,099.73 L 4.17%
Contingency Php 20,001,615.26 M 8.12%
Total Indirect Cost Php 68,113,608.73 27.64%

Fixed Capital Investment Php 231,370,036.02 93.87%

Working Capital Php 15,101,276.49 N 6.13%
Total Capital Investment Php 246,471,312.51

305
IV. Total Production Cost (TPC)

TOTAL PRODUCTION COST

I. Manufacturing Cost Cost (Php/kg) Exhibit %

A. Direct Production Cost AA
Raw Material Php 146.45 AA-1 50.75%
Operating Labor Php 24.08 AA-2 8.34%
Direct Supervisor and Cleric Labor Php 3.62 AA-3 1.25%
Utilities Php 9.25 AA-4 3.21%
Maintenance and Repair Php 8.58 AA-5 2.97%
Operating Supplies Php 1.29 AA-6 0.45%
Laboratory Charges Php 3.61 AA-7 1.25%
Total Production Cost Php 196.88 68.23%

B. Fixed Charges BB
Depreciation Php 11.92 BB-1 4.13%
Local Taxes Php 3.58 BB-2 1.24%
Insurance Php 1.00 BB-3 0.35%
Total Fixed Charges Php 16.49 5.72%

II. Plant Overhead Cost Php 21.77 CC 7.54%

Total Manufacturing Cost Php 235.15 81.49%

III. General Expenses DD

Administrative Cost Php 7.26 DD-1 2.51%
Distribution and Marketing Php 31.74 DD-2 11.00%
Research and Development Php 14.43 DD-3 5.00%

Total General Expenses Php 53.43 18.51%

Total Production Cost Php 288.57

306
IV. EXHIBIT A

TOTAL COST OR PURCHASED EQUIPMENT

Schedule
Pepsin Digester Php 7,115,702.56 A-1
Salt-Out Tank Php 3,788,752.90 A-2
Decanter Centrifuge Php 7,988,966.73 A-3
Freeze Drier Php 17,145,524.23 A-4
Other Equipment Php 7,207,789.28 A-5
Total Php 43, 246,735.70

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 (𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑)

= (𝑃ℎ𝑝 43,246,735.70)(1.25)

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 (𝑃𝑢𝑟𝑐ℎ𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑)

= 𝑷𝒉𝒑 𝟓𝟒, 𝟎𝟓𝟖, 𝟒𝟏𝟗. 𝟔𝟑

307
V. SCHEDULE A-1 (PEPSIN DIGESTER)

Equipment: Pepsin digester

Equipment code: J-3
Type: Jacketed, Enzymatic reactor
Material of Construction: SS316

From Equipment Design:

Capacity: 10.0 m3
No. of Units 1
Pressure: 22.04 psia

Cost of Reactor:

From Plant Design and Economics for Chemical Engineers by Peters and

Timmerhaus 5th edition, Figure 13-15, p. 628

Cost of Reactor2002 = $60,000 for 10.0 m3 capacity

Computing for the Present Cost of Reactor:

604
Present Cost of Reactor2019 = ($60,000) ( )
390.4

Present Cost of Reactor2019 = $𝟗𝟐, 𝟖𝟐𝟕. 𝟖𝟕

Cost of Insulation:

From Plant Design and Economics for Chemical Engineers by Peters and

Timmerhaus 5th edition, Figure 13-15, p. 628

For an insulation thickness of 50 mm,

Purchased Cost per m2 of Insulation installed= $101

308
Computing for the purchased cost of insulation for a 13.0 m2 heat transfer area,

Purchased Cost of insulation = $101 (5.0)

Purchased Cost of insulation = $1313.00

Computing for the present cost of insulation:

604
Present cost of insulation = ($1313) ( ) = $2,031.38
390.4

Cost of Impeller:

From Plant Design and Economics for Chemical Engineers by Peter and

Timmerhaus 5th edition, Figure 12-42 p.516

For a Pitched-blade impeller with motor size of 10 hp:

Purchased Cost of Impeller (2002) = $16,000

For stainless steel and rotational speed of 125 rpm, adjustment factor is 1.85.

Purchased Cost of Impeller (2019) = $𝟏𝟔, 𝟎𝟎𝟎 (𝟏. 𝟖𝟓) = $𝟐𝟗, 𝟔𝟎𝟎

Computing for the Present Cost of Impeller,

604
Present Cost of One (1) Impeller = $29,600 (390.4) = $45,795.08

Total Present Cost of J-3 = $92,827.87 + $2,031.38 + $45,795.08

Total Present Cost of J-3 = $𝟏𝟒𝟎, 𝟔𝟓𝟒. 𝟑𝟑

Total Present Cost of J-3 in Philippine Currency:

𝑃ℎ𝑝 50.59
Total Present Cost of J-3 = $140,654.33 ( )
1 𝑈𝑆𝐷

Total Present Cost of J-3 = 𝐏𝐡𝐩 𝟕, 𝟏𝟏𝟓, 𝟕𝟎𝟐. 𝟓𝟔

309
Cost of Reactor:

From Figure 15-17 of Peters and Timmerhaus 5th Ed.: Commented [KB1]:

Purchased Cost of Reactor (2002): $60,000

310
Cost of Insulation:

From Figure 15-17 of Peters and Timmerhaus 5th Ed.:

For insulation thickness of 0.55 m:

Purchased Cost of Insulation (2002) = $102 per m2 installed

311
Cost of Impeller:

From Figure 12-53 of Peters and Timmerhaus 5th Ed.:

Purchased Cost of Impeller (2002) = $16,000

For SS316 and rotational speed of 125 rpm, adjustment factor is 1.85

312
 SUMMARY OF FIGURES USED IN SCHEDULE A-1
(PEPSIN DIGESTER)

Equipment Capacity (F-2) 1.295 m3

No. of Units 1
1 USD equivalent to Php Php 50.59
Purchased Cost of Reactor (2002) $60,000
Present Cost of Reactor (2019) $92,827.87
Purchased Cost of Insulation (2002) per m2
$1,313.00
installed
Present Cost of Insulation (2002) per m2
$2,031.38
installed
Purchased Cost of Impeller (2002), Single $16,000
Present Cost of Impeller $29,600.00
Total Present Cost of F-2 $140,654.33
Total Present Cost of F-2 in Php Php 7,115,702.56

313
VI. SCHEDULE A-2 (VACUUM CRYSTALLIZER)

Equipment: Vacuum crystallizer

Equipment code: F-2
Type: Salt-out, Crystallizer
Material of Construction: SS316

From Equipment Design:

Capacity: 44.90 gal
No. of Units: 1

Cost of Crystallizer:

Purchased Cost of Salting Out Crystallizer (1990)

Present cost of vacuum crystallizer with volume of 90 gal is $300,000 as of January

1990. (PD&E for ChE, Peters, Timmerhaus, & West 4th Ed.; Fig. 14-76, p561).

314
𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐶𝑟𝑦𝑠𝑡𝑎𝑙𝑙𝑖𝑧𝑒𝑟

3.58 𝑡𝑜𝑛 0.60 604

= ($300,000.00) ( ) ( )
90 𝑡𝑜𝑛 356

𝑷𝒓𝒆𝒔𝒆𝒏𝒕 𝑪𝒐𝒔𝒕 𝒐𝒇 𝑪𝒓𝒚𝒔𝒕𝒂𝒍𝒍𝒊𝒛𝒆𝒓 (𝟐𝟎𝟏𝟗) = $𝟕𝟑, 𝟓𝟑𝟒. 𝟕𝟑

315
Cost of Pump:

Pressure Drop:

∆𝑃 = 𝜌𝑠𝑙𝑢𝑟𝑟𝑦 𝑔ℎ𝑇𝐷𝐻

𝑘𝑔 𝑁−𝑚
∆𝑃 = (1,257.70 ) (9.889 ) = 12,437 𝑃𝑎 = 1.80 𝑝𝑠𝑖
𝑚3 𝑘𝑔

Purchased Cost of Pump (1990)

𝑙𝑏 𝑙𝑏
𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝐹𝑎𝑐𝑡𝑜𝑟 = 𝑔𝑝𝑚 𝑥 = (72.34 𝑔𝑝𝑚)(1.80 𝑝𝑠𝑖) = 130.21 𝑔𝑝𝑚
𝑖𝑛2 𝑖𝑛2

𝑙𝑏
Present cost of centrifugal pump with capacity factor of 122.43 𝑔𝑝𝑚 is $1500
𝑖𝑛2

as of January 1990. (PD&E for ChE, Peters, Timmerhaus, & West 4th Ed.; Fig. 14-

41, p527)

316
𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐶𝑒𝑛𝑡𝑟𝑖𝑓𝑢𝑔𝑎𝑙 𝑃𝑢𝑚𝑝 (1990)

𝑙𝑏 0.60
130.21 𝑔𝑝𝑚 604
= ($1,500) ( 𝑖𝑛2 ) ( ) = $748.98
𝑙𝑏 356
1000 𝑔𝑝𝑚 2
𝑖𝑛

𝑷𝒓𝒆𝒔𝒆𝒏𝒕 𝑪𝒐𝒔𝒕 𝒐𝒇 𝑪𝒆𝒏𝒕𝒓𝒊𝒇𝒖𝒈𝒂𝒍 𝑷𝒖𝒎𝒑 (𝟐𝟎𝟏𝟗) = $𝟕𝟒𝟖. 𝟗𝟖

317
Cost of Insulation:

From PD&E for ChE, Peters, Timmerhaus, & West 5th Edition, Fig. 15-17, p797

For Insulation thickness of 6.33mm for Collection Vessel:

𝐶𝑜𝑠𝑡 𝑜𝑓 𝐼𝑛𝑠𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑝𝑒𝑟 𝑚2 installed = $155

𝐻𝑒𝑎𝑡 𝑇𝑟𝑎𝑛𝑠𝑓𝑒𝑟 𝐴𝑟𝑒𝑎 = 2.97 𝑚2

$155 2)
0.0063 m 0.60 604
𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐼𝑛𝑠𝑢𝑙𝑎𝑡𝑖𝑜𝑛 = (2.97 𝑚 ( ) ( )
𝑚2 0.026 m 390.4

= $𝟑𝟎𝟑. 𝟑𝟖

318
For Insulation thickness of 6.34mm for Cooling Condenser:

𝐶𝑜𝑠𝑡 𝑜𝑓 𝐼𝑛𝑠𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑝𝑒𝑟 𝑚2 installed = $155

𝐻𝑒𝑎𝑡 𝑇𝑟𝑎𝑛𝑠𝑓𝑒𝑟 𝐴𝑟𝑒𝑎 = 2.97 𝑚2

$155 0.0064 m 0.60 604

𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐼𝑛𝑠𝑢𝑙𝑎𝑡𝑖𝑜𝑛 = 2
(3.06 𝑚2 ) ( ) ( )
𝑚 0.026 m 390.4

= $𝟑𝟎𝟒. 𝟐𝟓

Total Present Cost of F-2:

𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐹 − 2

= $𝟕𝟑, 𝟓𝟑𝟒. 𝟕𝟑 + $𝟕𝟒𝟖. 𝟗𝟖 + $𝟑𝟎𝟑. 𝟑𝟖 + $𝟑𝟎𝟒. 𝟐𝟓

𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐹 − 2 = $ 74,891.34

Total Present Cost of F-2 in Philippine Currency:

$ 74,891.34 𝑃ℎ𝑝 50.59

𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐹 − 2 = ( )(1 𝑢𝑛𝑖𝑡) ( )
𝑢𝑛𝑖𝑡 $1.00

𝑻𝒐𝒕𝒂𝒍 𝑷𝒓𝒆𝒔𝒆𝒏𝒕 𝑪𝒐𝒔𝒕 𝒐𝒇 𝑭 − 𝟐 = 𝑷𝒉𝒑 𝟑, 𝟕𝟖𝟖, 𝟕𝟓𝟐. 𝟖𝟗

319
 SUMMARY OF FIGURES USED IN SCHEDULE A-2
(SALT OUT CRYSTALLIZER)

Equipment Capacity (F-2) 0.17 m3

No. of Units 1
1 USD equivalent to Php Php 50.59
Crystallizer Cost at 1990 for 90 gal $ 300,000
Present cost of Crystallizer $ 73,534.73
Purchased Cost of Insulation per m2
$ 155
installed for Collection Vessel
Present Cost of Insulation for
$ 303.38
Collection Vessel
Purchased Cost of Insulation per m2
$ 155
installed for Cooling Condenser
Present Cost of Insulation for Cooling
$ 304.25
Condenser
Cost of Centrifugal Pump at 1990 $ 1500
Present Cost of Centrifugal Pump $ 748.98
Total Present Cost of F-2 $ 74,891.34
Total Present Cost of F-2 in Php Php 3,788l,752.89

320
VII. SCHEDULE A-3 (DECANTER CENTRIFUGE)

Equipment: Decanter Centrifuge

Equipment code: K-5
Type: Decanter, Centrifuge
Material of Construction: SS316

From Equipment Design:

Feed Capacity: 36.0 m3
No. of Units 1

Cost of Decanter Centrifuge:

From Equipment Design

Design Capacity: 0.04 m3

Solid Liquid = 1

Purchased Cost of Decanter Centrifuge (2002)

Present cost of Decanter Centrifuge with bowl diameter of 0.6m is $70,000 as of

January 2002.

(PD&E for ChE, Peters, Timmerhaus, & West 5th Ed.; Fig. 15-43, p866).

321
𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐷𝑒𝑐𝑎𝑛𝑡𝑒𝑟 𝐶𝑒𝑛𝑡𝑟𝑖𝑓𝑢𝑔𝑒

0.50 0.6 604

$70,000 × [ ] × [ ] = $157,915.93
0.32 390.4

Total Present Cost of Decanter Centrifuge in Philippine Currency:

₱50.59
$157,915.93 × [ ] = ₱𝟕, 𝟗𝟖𝟖, 𝟗𝟔𝟔. 𝟕𝟑
$1

322
 SUMMARY OF FIGURES USED IN SCHEDULE A-3
(DECANTER CENTRIFUGE)

Equipment Capacity (K-5) 36 m3

No. of Units 1
1 USD equivalent to Php Php 50.59
Purchased cost of Decanter centrifuge
$70,000
based on bowl diameter (2002)
Total Present cost of Decanter
$157,915.93
centrifuge
Total Present Cost of F-2 in Php Php 7,988,966.73

323
VIII. SCHEDULE A-4 (FREEZE-DRIER)

Equipment: Freeze-drier
Equipment code: T-2
Type: Vacuum, Freeze-drier
Material of Construction: AIS SS316L
From Equipment Design:

Capacity: 1.34 m3
No. of Units 1

Cost of Dryer:

From Plant Design and Economics for Chemical Engineers by Peter and

Timmerhaus 5th edition, Figure 15-32, P.847.

Cost of dryer2002 (based on total shelf area) = $100,700

604
Present cost of dryer2019 (based on total shelf area) = $100,700 (309.4) =

$196,583.06

Present cost in Philippine currency:

Php 50.59
$196,583.06(1 unit) ( ) = 𝐏𝐡𝐩𝟗, 𝟗𝟒𝟓, 𝟏𝟑𝟕. 𝟐𝟏
1USD

324
Cost of Compressor:

From Plant Design and Economics for Chemical Engineers by Peter and

Timmerhaus 5th edition, Figure 12-28, P.531

For a power requirement of 85kW

Cost2002= $85,000

Computing for the cost of the compressor with a power requirement of 85.45kW

using Sixth tenth rule:

85.45 0.6
Cost2002= $85,000 ( ) = $85,269.71
85

Computing for the present cost:

604
Cost2019=$85,269.71 ( ) = $131,923.43
390.4

Present cost in Philippine currency:

Php 50.59
$171,152.82(1 unit) ( ) = 𝐏𝐡𝐩𝟔, 𝟔𝟒𝟕, 𝟎𝟎𝟔. 𝟒𝟏
1USD

Cost of Heat Exchanger (Evaporator):

From Plant Design and Economics for Chemical Engineers by Peter and

Timmerhaus 5th edition, Figure 14-16, P.681

For a heating area of 90 m2:

Cost2002=$10,000

325
Computing for the cost of the shell and tube heat exchanger with a heating area of

0.5732m2 using sixth tenth rule:

0.5732 0.6
Cost2002=$10,000( ) = $481.32
90

Computing for the present cost:

604
Cost2019=$481.67 ( ) = $744.67
390.4

Present cost in Philippine currency:

50.59Php
$1561.93(1 unit)( ) = 𝟑𝟕, 𝟔𝟕𝟐. 𝟗𝟖𝐏𝐡𝐩
1USD

Cost of Heat Exchanger (Condenser):

From Plant Design and Economics for Chemical Engineers by Peter and

Timmerhaus 5th edition, Figure 14-16, P.681

For a heating area of 90 m2:

Cost2002=$10,000

Computing for the cost of the shell and tube heat exchanger with a heating area of

1.53m2 using sixth tenth rule:

1.53 0.6
Cost2002=$10,000( ) = $867.5
90

Computing for the present cost:

604
Cost2019=$867.5 (390.4) = $1,342.13

326
Present cost in Philippine currency:

50.59Php
$1,342.13(1 unit) ( ) = 𝟔𝟕, 𝟖𝟗𝟖. 𝟔𝟓𝐏𝐡𝐩
1USD

Cost of Insulation:

From Plant Design and Economics for Chemical Engineers by Peter and

Timmerhaus 5th edition, Figure 15-17, P.797

For an insulation thickness of 52mm:

$102
Cost2002= m2

For 52.71m2 of insulation:

$102
Cost2002= (52.71𝑚2 ) = $5,376.42
m2

Computing for the present cost of the insulation:

604
Cost2019= $5,376.42 (390.4) = $8,318.03

Present cost in Philippine currency:

50.59Php
$9107.62(1unit) ( ) = 𝟒𝟐𝟎, 𝟖𝟎𝟖. 𝟗𝟖𝐏𝐡𝐩
1USD

Total Present Cost of Freeze-Drier:

Php 9,945,137.21 + 6,647,006.41Php + 37,672.98Php + 67,898.65Php

+ 420,808.98Php

= Php 17,145,524.23

327
Cost of Freeze-Drier:

From Plant Design and Economics for Chemical Engineers by Peter and

Timmerhaus 5th edition, Figure 15-32, P.847.

Purchased Cost of Dryer (2002) = $100,700

328
Cost of Reciprocating Compressor:

From Plant Design and Economics for Chemical Engineers by Peter and

Timmerhaus 5th edition, Figure 12-28, P.531

Purchased cost of Reciprocating compressor2002 with a power requirement of 85kW

= $85,000

329
Cost of Shell and Tube Heat Exchanger:

From Plant Design and Economics for Chemical Engineers by Peter and

Timmerhaus 5th edition, Figure 14-16, P.681

Purchased Cost of Shell and Tube Heat Exchanger2002 with a heating area of 90 m2

= $10,000

330
Cost of Insulation:

From Plant Design and Economics for Chemical Engineers by Peter and

Timmerhaus 5th edition, Figure 15-17, P.797

Purchased Cost of Insulation (2002) with a thickness of 52mm = $102/m2

331
 SUMMARY OF FIGURES USED IN SCHEDULE A-4
(FREEZE DRIER)

Equipment Capacity (F-2) 1.34 m3

No. of Units 1
1 USD equivalent to Php Php 50.59
Drier Cost at 2002 based on shelf area $100,700
Present cost of drier $196,583.06
Purchased Cost at 2002 of compressor with a
$85,269.71
power requirement of 85.45kW
Present Cost of compressor with a power
$131,923.43
requirement of 85.45kW
Purchased Cost at 2002 of shell and tube heat
$867.5
exchanger (condenser)
Present Cost of shell and tube heat exchanger
$1,342.13
(condenser)
Purchased cost at 2002 of shell and tube heat
$481.32
exchanger (evaporator)
Present Cost of shell and tube heat exchanger
$744.67
(evaporator)
Purchased cost at 2002 of insulation $5,376.42
Present cost of insulation $8318.03
Total Present Cost of F-2 $338,911.33
Total Present Cost of F-2 in Php Php 17,145,524.23

332
IX. SCHEDULE A-5

OTHER EQUIPMENT COST

Schedule
Pepsin Digester Php 7,115,702.56 A-1
Salt-Out Tank Php 3,788,752.90 A-2
Decanter Centrifuge Php 7,988,966.73 A-3
Freeze Drier Php 17,145,524.23 A-4
Total: Php 36,028,946.42

The four equipment previously designed are the major equipment and much

expensive compared to the others. Therefore, assuming 20% of the total cost of the

four major equipment as the cost of the remaining equipment:

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑂𝑡ℎ𝑒𝑟 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 = (𝑃ℎ𝑝 36,028,946.42)(0.20)

𝑪𝒐𝒔𝒕 𝒐𝒇 𝑶𝒕𝒉𝒆𝒓 𝑬𝒒𝒖𝒊𝒑𝒎𝒆𝒏𝒕 = 𝑷𝒉𝒑 𝟒𝟑, 𝟐𝟒𝟔, 𝟕𝟑𝟓. 𝟕𝟎

333
X. EXHIBIT B

Installation Cost

The installation cost of purchased equipment includes the cost for manpower,

foundations, flat forms, supports, construction expenses and other factors directly

associated to the erection of purchased equipment.

𝐼𝑛𝑠𝑡𝑎𝑙𝑙𝑎𝑡𝑖𝑜𝑛 𝐶𝑜𝑠𝑡 = 39% 𝑜𝑓 𝑡ℎ𝑒 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑

(Reference: Peters ad Timmerhaus, Table 6-9, Solid-Fluid Processing Plant, p. 251)

From Exhibit A:

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 = 𝑃ℎ𝑝 54,058,419.63

𝐼𝑛𝑠𝑡𝑎𝑙𝑙𝑎𝑡𝑖𝑜𝑛 𝐶𝑜𝑠𝑡 = 0.39(𝑃ℎ𝑝 54,058,419.63)

𝑰𝒏𝒔𝒕𝒂𝒍𝒍𝒂𝒕𝒊𝒐𝒏 𝑪𝒐𝒔𝒕 = 𝑷𝒉𝒑 𝟐𝟏, 𝟎𝟖𝟐, 𝟕𝟖𝟑. 𝟔𝟔

334
XI. EXHIBIT C

Instrumentation and Control Cost

The major constituents of the instrument and control cost are the instruments cost

installation-labor costs, and the expenses for auxiliary and material. These

auxiliaries are composed of the pressure and temperature gauges and flow

controllers in the processing plant.

𝐼𝑛𝑠𝑡𝑟𝑢𝑚𝑒𝑛𝑡𝑎𝑙 𝑎𝑛𝑑 𝐶𝑜𝑛𝑡𝑟𝑜𝑙 𝐶𝑜𝑠𝑡

= 26% 𝑜𝑓 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑

(Reference: Peters and Timmerhaus, Table 6-9, Solid-Fluid Processing Plant, p.

251)

From Exhibit A:

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 = 𝑃ℎ𝑝 54,058,419.63

𝐼𝑛𝑠𝑡𝑟𝑢𝑚𝑒𝑛𝑡𝑎𝑙 𝑎𝑛𝑑 𝐶𝑜𝑛𝑡𝑟𝑜𝑙 𝐶𝑜𝑠𝑡 = 0.26(𝑃ℎ𝑝 54,058,419.63)

𝑰𝒏𝒔𝒕𝒓𝒖𝒎𝒆𝒏𝒕𝒂𝒍 𝒂𝒏𝒅 𝑪𝒐𝒏𝒕𝒓𝒐𝒍 𝑪𝒐𝒔𝒕 = 𝑷𝒉𝒑 𝟏𝟒, 𝟎𝟓𝟓, 𝟏𝟖𝟗. 𝟏𝟎

335
XII. EXHIBIT D

Piping Cost

The cost of piping encompasses the labor cost, cost of piping materials, valves,

fittings, supports and other item related necessary for the pipe installation and

operation directly used in the process.

𝑃𝑖𝑝𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 = 31% 𝑜𝑓 𝑡ℎ𝑒 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑

(Reference: Peters and Timmerhaus, Table 6-9, Solid-Fluid Processing Plant, p.

251)

From Exhibit A:

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 = 𝑃ℎ𝑝 54,058,419.63

𝑃𝑖𝑝𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 = 0.31(𝑃ℎ𝑝 54,058,419.63)

𝑷𝒊𝒑𝒊𝒏𝒈 𝑪𝒐𝒔𝒕 = 𝑷𝒉𝒑 𝟏𝟔, 𝟕𝟓𝟖, 𝟏𝟏𝟎. 𝟎𝟗

336
XIII. EXHIBIT E

Buildings (Including Services)

Cost of buildings covers the total expenses of the construction of administrative

offices and other buildings connected in the plant. This also includes other building

services such as plumbing, ventilation, air-conditioning, heating, lighting and etc.

𝐵𝑢𝑖𝑙𝑑𝑖𝑛𝑔 (𝐼𝑛𝑐𝑙𝑢𝑑𝑖𝑛𝑔 𝑆𝑒𝑟𝑣𝑖𝑐𝑒𝑠) = 29% 𝑜𝑓 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑

(Reference: Peters and Timmerhaus, Table 6-9, Solid-Fluid Processing Plant, p.

251)

From Exhibit A:

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 = 𝑃ℎ𝑝 54,058,419.63

𝐵𝑢𝑖𝑙𝑑𝑖𝑛𝑔 (𝐼𝑛𝑐𝑙𝑢𝑑𝑖𝑛𝑔 𝑆𝑒𝑟𝑣𝑖𝑐𝑒𝑠) = 0.29(𝑃ℎ𝑝 54,058,419.63)

𝑩𝒖𝒊𝒍𝒅𝒊𝒏𝒈 (𝑰𝒏𝒄𝒍𝒖𝒅𝒊𝒏𝒈 𝑺𝒆𝒓𝒗𝒊𝒄𝒆𝒔) = 𝑷𝒉𝒑 𝟏𝟓, 𝟔𝟕𝟔, 𝟗𝟒𝟏. 𝟔𝟗

337
XIV. EXHIBIT F

Electrical Systems (Installed)

The electrical system cost is primarily consists of installation labor and materials

for power and lightning. It is consistof major components such as wiring, power,

lighting, instrument and control wiring, transformation and other electrical related

services required by plant.

𝐸𝑙𝑒𝑐𝑡𝑟𝑖𝑐𝑎𝑙 𝑆𝑦𝑠𝑡𝑒𝑚𝑠 (𝐼𝑛𝑠𝑡𝑎𝑙𝑙𝑒𝑑)

= 10% 𝑜𝑓 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑

(Reference: Peters and Timmerhaus, Table 6-9, Solid-Fluid Processing Plant, p.

251)

From Exhibit A:

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 = 𝑃ℎ𝑝 54,058,419.63

𝐸𝑙𝑒𝑐𝑡𝑟𝑖𝑐𝑎𝑙 𝑆𝑦𝑠𝑡𝑒𝑚𝑠 (𝐼𝑛𝑠𝑡𝑎𝑙𝑙𝑒𝑑) = 0.10(𝑃ℎ𝑝 54,058,419.63)

𝑬𝒍𝒆𝒄𝒕𝒓𝒊𝒄𝒂𝒍 𝑺𝒚𝒔𝒕𝒆𝒎𝒔 (𝑰𝒏𝒔𝒕𝒂𝒍𝒍𝒆𝒅) = 𝑷𝒉𝒑 𝟓, 𝟒𝟎𝟓, 𝟖𝟒𝟏. 𝟗𝟔

338
XV. EXHIBIT G

Yard Improvement

Yard improvement cost of a production plant covers expenditures on fences,

construction of sidings, walkways, roads, sideways, landscaping and other related

items to yard developments.

𝑌𝑎𝑟𝑑 𝐼𝑚𝑝𝑟𝑜𝑣𝑒𝑚𝑒𝑛𝑡 = 12% 𝑜𝑓 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑

(Reference: Peters and Timmerhaus, Table 6-9, Solid-Fluid Processing Plant, p.

251)

From Exhibit A:

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 = 𝑃ℎ𝑝 54,058,419.63

𝑌𝑎𝑟𝑑 𝐼𝑚𝑝𝑟𝑜𝑣𝑒𝑚𝑒𝑛𝑡 = 0.12(𝑃ℎ𝑝 54,058,419.63)

𝒀𝒂𝒓𝒅 𝑰𝒎𝒑𝒓𝒐𝒗𝒆𝒎𝒆𝒏𝒕 = 𝑷𝒉𝒑 𝟔, 𝟒𝟖𝟕, 𝟎𝟏𝟎. 𝟖𝟎

339
XVI. EXHIBIT H

Service Facilities

Service facilities encompasses the utilities necessary to operate different process

equipment in a production plant such as utilities for supplying steam, water, power,

compressed air, and fuel. The cost of service facilities includes waste disposal, fire

protection, and other miscellaneous services items and facilities.

𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝐹𝑎𝑐𝑖𝑙𝑖𝑡𝑖𝑒𝑠 = 55% 𝑜𝑓 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑

(Reference: Peters and Timmerhaus, Table 6-9, Solid-Fluid Processing Plant, p.

251)

From Exhibit A:

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 = 𝑃ℎ𝑝 54,058,419.63

𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝐹𝑎𝑐𝑖𝑙𝑖𝑡𝑖𝑒𝑠 = 0.55(𝑃ℎ𝑝 54,058,419.63)

𝑺𝒆𝒓𝒗𝒊𝒄𝒆 𝑭𝒂𝒄𝒊𝒍𝒊𝒕𝒊𝒆𝒔 = 𝑷𝒉𝒑 𝟐𝟗, 𝟕𝟑𝟐, 𝟏𝟑𝟎. 𝟖𝟎

340
XVII. EXHIBIT I

Engineering and Supervision

The costs for construction design and engineering, drafting, purchasing,

accounting, construction and cost engineering, travel, reproductions,

communications, and home office expense including overhead constitute the capital

investment for engineering and supervision.

𝐸𝑛𝑔𝑖𝑛𝑒𝑒𝑟𝑖𝑛𝑔 𝑎𝑛𝑑 𝑆𝑢𝑝𝑒𝑟𝑣𝑖𝑠𝑖𝑜𝑛 = 32% 𝑜𝑓 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑

(Reference: Peters and Timmerhaus, Table 6-9, Solid-Fluid Processing Plant, p.

251)

From Exhibit A:

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 = 𝑃ℎ𝑝 54,058,419.63

𝐸𝑛𝑔𝑖𝑛𝑒𝑒𝑟𝑖𝑛𝑔 𝑎𝑛𝑑 𝑆𝑢𝑝𝑒𝑟𝑣𝑖𝑠𝑖𝑜𝑛 = 0.32(𝑃ℎ𝑝 54,058,419.63)

𝑬𝒏𝒈𝒊𝒏𝒆𝒆𝒓𝒊𝒏𝒈 𝒂𝒏𝒅 𝑺𝒖𝒑𝒆𝒓𝒗𝒊𝒔𝒊𝒐𝒏 = 𝑷𝒉𝒑 𝟏𝟕, 𝟐𝟗𝟖, 𝟔𝟗𝟒. 𝟐𝟖

341
XVIII. EXHIBIT J

Construction Expenses

The construction expenses cover all the construction labor cost and construction

expenses such as construction tools, materials, rentals, and payrolls, taxes and

insurance and other items and services linked to construction processes.

𝐶𝑜𝑛𝑠𝑡𝑟𝑢𝑐𝑡𝑖𝑜𝑛 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 = 34% 𝑜𝑓 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑

(Reference: Peters and Timmerhaus, Table 6-9, Solid-Fluid Processing Plant, p.

251)

From Exhibit A:

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 = 𝑃ℎ𝑝 54,058,419.63

𝐶𝑜𝑛𝑠𝑡𝑟𝑢𝑐𝑡𝑖𝑜𝑛 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 = 0.34(𝑃ℎ𝑝 54,058,419.63)

𝑪𝒐𝒏𝒔𝒕𝒓𝒖𝒄𝒕𝒊𝒐𝒏 𝑬𝒙𝒑𝒆𝒏𝒔𝒆𝒔 = 𝑷𝒉𝒑 𝟏𝟖, 𝟑𝟕𝟗, 𝟖𝟔𝟐. 𝟔𝟕

342
XIX. EXHIBIT K

Legal Expenses

Legal cost includes the expenditures in the processing of equipment and land

purchase and construction contracts. It is mainly comprised of understanding and

proving compliance to government requirements on environmental and safety

measures.

𝐿𝑒𝑔𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 = 4% 𝑜𝑓 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑

(Reference: Peters and Timmerhaus, Table 6-9, Solid-Fluid Processing Plant, p.

251)

From Exhibit A:

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 = 𝑃ℎ𝑝 54,058,419.63

𝐿𝑒𝑔𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠 = 0.04(𝑃ℎ𝑝 54,058,419.63)

𝑳𝒆𝒈𝒂𝒍 𝑬𝒙𝒑𝒆𝒏𝒔𝒆𝒔 = 𝑷𝒉𝒑 𝟐, 𝟏𝟔𝟐, 𝟑𝟑𝟔. 𝟕𝟗

343
XX. EXHIBIT L

Contractor’s Fee

The contractor’s fee is the payment given to the architectural and construction

company responsible for the construction of the production plant and all other fees

related to various contracts.

𝐶𝑜𝑛𝑡𝑟𝑎𝑐𝑡𝑜𝑟 ′ 𝑠 𝐹𝑒𝑒 = 19% 𝑜𝑓 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑

(Reference: Peters and Timmerhaus, Table 6-9, Solid-Fluid Processing Plant, p.

251)

From Exhibit A:

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 = 𝑃ℎ𝑝 54,058,419.63

𝐶𝑜𝑛𝑡𝑟𝑎𝑐𝑡𝑜𝑟 ′ 𝑠 𝐹𝑒𝑒 = 0.19(𝑃ℎ𝑝 54,058,419.63)

𝑪𝒐𝒏𝒕𝒓𝒂𝒄𝒕𝒐𝒓′ 𝒔 𝑭𝒆𝒆 = 𝑷𝒉𝒑 𝟏𝟎, 𝟐𝟕𝟏, 𝟎𝟗𝟗. 𝟕𝟑

344
XXI. EXHIBIT M

Contingency

Contingency cost is usually incorporated in the estimation of the cost for a project

in recognition of the possible occurrence of unplanned and unexpected events and

charges which may inevitably raise the cost of establishing the production plant.

Natural forces such as floods and storms, price hikes, and strikes, and other

unwanted events such as transportation accidents, unaccounted expenses and errors

in the cost estimation must have their own proper appropriation in the cost

estimation.

𝐶𝑜𝑛𝑡𝑖𝑛𝑔𝑒𝑛𝑐𝑦 = 37% 𝑜𝑓 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝐸𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑

(Reference: Peters and Timmerhaus, Table 6-9, Solid-Fluid Processing Plant, p.

251)

From Exhibit A:

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝐷𝑒𝑙𝑖𝑣𝑒𝑟𝑒𝑑 = 𝑃ℎ𝑝 54,058,419.63

𝐶𝑜𝑛𝑡𝑖𝑛𝑔𝑒𝑛𝑐𝑦 = 0.37(𝑃ℎ𝑝 54,058,419.63)

𝑪𝒐𝒏𝒕𝒊𝒏𝒈𝒆𝒏𝒄𝒚 = 𝑷𝒉𝒑 𝟐𝟎, 𝟎𝟎𝟏, 𝟔𝟏𝟓. 𝟐𝟔

345
XXII. EXHIBIT N

Working Capital

The working capital for an industrial plant consists of investments

designated to: (1) Raw materials, (2) Expenses for labors, and (3) Utilities

Working Capital = Raw Materials + Labor Costs + Utilities

SUMMARY OF TOTAL WORKING CAPITAL

Php Schedule
Raw Material Php 12,387,747.60 N-1
Labor Php 2,022,537.60 N-2
Utilities N-3
A. Water Php 112, 205.49
B. Electricity Php 357,778.11
TOTAL WORKING CAPITAL Php 14,880,268.80

346
XXIII. SCHEDULE N-1

Raw material is one of the major costs in a production operation. Raw Materials

are the unprocessed materials that are used to produce goods and manufacture

products. These stored raw materials will be good for 60 days of operation.

A. Yellowfin tuna skin:

Live Tuna Price = PhP 106.45 / kilogram

Source: https://www.ceicdata.com/en/philippines/farmgate-price-selected-

agricultural-commodities/farmgate-price-fishery-yellowfin-tuna

From the material balance, the amount of yellowfin tuna skin is 12,000kg/day.

Basis: Yellowfin tuna skin constitutes 10% of the total live weight of the yellowfin

tuna (Chapter 4)

Price per kilogram of yellowfin tuna skin:

𝑃𝑟𝑖𝑐𝑒 (𝑃ℎ𝑝)
⁄𝑘𝑔 𝑦𝑒𝑙𝑙𝑜𝑤𝑓𝑖𝑛 𝑡𝑢𝑛𝑎 𝑠𝑘𝑖𝑛 = (𝑃ℎ𝑝106.45)(0.10) = 𝑃ℎ𝑝10.65

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑦𝑒𝑙𝑙𝑜𝑤𝑓𝑖𝑛 𝑡𝑢𝑛𝑎 𝑠𝑘𝑖𝑛

𝑃ℎ𝑝 10.65 12000𝑘𝑔

= ( ) (60𝑑𝑎𝑦𝑠)
𝑘𝑔 𝑦𝑒𝑙𝑙𝑜𝑤𝑓𝑖𝑛 𝑡𝑢𝑛𝑎 𝑠𝑘𝑖𝑛 𝑑𝑎𝑦

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑦𝑒𝑙𝑙𝑜𝑤𝑓𝑖𝑛 𝑡𝑢𝑛𝑎 𝑠𝑘𝑖𝑛 = 𝑃ℎ𝑝7,668,000.00

347
 SUMMARY OF FIGURES USED IN SCHEDULE N-1

YELLOWFIN TUNA SKIN

Live Yellowfin Tuna Skin, per kg Php106.45
Amount of Yellowfin Tuna Skin Needed 12,000kg/day
Percentage of skin in live yellowfin tuna 10%
Days of operation 60 days
Price per kilogram of yellowfin tuna skin Php 10.65
Cost of yellowfin tuna skin Php 7,668,000.00

348
 B. Hydrochloric acid:

Price: USD 200/MT ≈ PhP 10.12 / kilogram

Grade Standard: Food Grade, Medicine Grade, Industrial Grade
Reference: Alibaba Globe Trade
https://m.alibaba.com/product/60699478440/Industrial-
Food-Medical-Grade-35-
Source: 37.html?spm=a2700.7724857.normalList.9.61037233lctlTx
&subject=Industrial--Food--Medical--Grade--35--
37&detailld=60699478440&redirect=1

From Material Balance: The required daily total amount of Hydrochloric Acid is

850.04 kilograms.

Cost of Hydrochloric Acid:

𝑃ℎ𝑝 10.12 850.04𝑘𝑔 𝐻𝑦𝑑𝑟𝑜𝑐ℎ𝑙𝑜𝑟𝑖𝑐 𝐴𝑐𝑖𝑑

( )( ) (60 𝑑𝑎𝑦𝑠)
𝑘𝑔 𝑜𝑓 𝐻𝑦𝑑𝑟𝑜𝑐ℎ𝑙𝑜𝑟𝑖𝑐 𝐴𝑐𝑖𝑑 𝑑𝑎𝑦

𝐶𝑜𝑠𝑡 𝑜𝑓 𝐻𝑦𝑑𝑟𝑜𝑐ℎ𝑙𝑜𝑟𝑖𝑐 𝐴𝑐𝑖𝑑 = 𝑃ℎ𝑝 516,144.29

349
 SUMMARY OF FIGURES USED IN N-1

HYDROCHLORIC ACID
Hydrochloric Acid Price, per kg Php 10.12
Amount of Hydrochloric Acid
850.04 kg/day
Required
Days of Operation 60 days
Cost of Hydrochloric Acid Php 516,144.29

350
 C. Sodium hydroxide:

Price: USD 0.50 / kilogram ≈ Php 25.30/kilogram

Grade Standard: Food Grade, Industrial Grade
Reference: Alibaba Globe Trade

https://www.alibaba.com/product-detail/Pure-white-flakes-
caustic-soda-
Source:
99_60737755868.html?spm=a2700.7724857.normalList.42.
720a29e7BRGT2B

From Material Balance: The required daily total amount of sodium hydroxide is

808.89 kilograms

Cost of Sodium Hydroxide:

𝑃ℎ𝑝 25.30 808.89𝑘𝑔 𝑆𝑜𝑑𝑖𝑢𝑚 𝐻𝑦𝑑𝑟𝑜𝑥𝑖𝑑𝑒

( )( ) (60𝑑𝑎𝑦𝑠)
𝑘𝑔 𝑆𝑜𝑑𝑖𝑢𝑚 𝐻𝑦𝑑𝑟𝑜𝑥𝑖𝑑𝑒 𝑑𝑎𝑦

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑆𝑜𝑑𝑖𝑢𝑚 𝐻𝑦𝑑𝑟𝑜𝑥𝑖𝑑𝑒 = 𝑃ℎ𝑝 1,227,895.02

351
 SUMMARY OF FIGURES USED IN SCHEDULE N-1

SODIUM HYDROXIDE
Sodium Hydroxide Price, per kg Php 25.30
Amount of Sodium Hydroxide Required 808.89kg/day
Days of Operation 60 days
Cost of Sodium Hydroxide Php 1,227,895.02

352
 D. Pepsin:

Price: USD 12.00/kilogram ≈Php607.08/kilogram

Grade
Standar Pharmaceutical Grade, Food Grade
d:

Referenc
Alibaba Globe Trade
e:
https://www.alibaba.com/product-detail/Manufacture-supply-
Pepsin-1-10000-
Source:
NF_62297606583.html?spm=a2700.7724857.normalList.27.776849
db1uW081&s=p

From Material Balance: The required daily total amount of pepsin is 47.83

kilograms

Cost of Pepsin:

𝑃ℎ𝑝607.08 46.41𝑘𝑔 𝑃𝑒𝑝𝑠𝑖𝑛

( )( ) (60 𝑑𝑎𝑦𝑠)
𝑘𝑔 𝑝𝑒𝑝𝑠𝑖𝑛 𝑑𝑎𝑦

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑃𝑒𝑝𝑠𝑖𝑛 = 1,690,474.97

353
 SUMMARY OF FIGURES USED IN SCHEDULE N-1

PEPSIN
Pepsin Price, per kg Php 607.08
Amount of Pepsin Required 46.41kg/day
Days of Operation 60 days
Cost of Pepsin Php 1,690,474.97

354
 E. Acetic Acid:

Price: USD250.00/MT ≈ Php12.65/kg

Grade
Food Grade, Industrial Grade
Standard:
Referenc
Alibaba Globe Trade
e:
https://www.alibaba.com/product-detail/ISO-Factory-Glacial-
Acetic-Acid-
Source:
GAA_50039142633.html?spm=a2700.7724857.main07.9.6d29492
dY72XFd

From Material Balance: The required daily total amount of acetic acid is 1611.37

kilograms.

Cost of Acetic Acid:

𝑃ℎ𝑝 12.65 1579.90𝑘𝑔 𝐴𝑐𝑒𝑡𝑖𝑐 𝐴𝑐𝑖𝑑

( )( ) (60 𝑑𝑎𝑦𝑠)
𝑘𝑔 𝑜𝑓 𝐴𝑐𝑒𝑡𝑖𝑐 𝐴𝑐𝑖𝑑 𝑑𝑎𝑦

𝐶𝑜𝑠𝑡 𝑜𝑓 𝐴𝑐𝑒𝑡𝑖𝑐 𝐴𝑐𝑖𝑑 = 𝑃ℎ𝑝 1,199,144.10

SUMMARY OF FIGURES IN SCHEDULE N-1

355
ACETIC ACID
Acetic Acid, per kg Php 12.65
Amount of Acetic Acid Required 1579.90kg/day
Days of Operation 60 days
Cost of Acetic Acid Php 1,199,144.10

356
 SUMMARY OF RAW MATERIAL COSTS
Yellowfin Tuna Skin Php 7,668,000.00
Hydrochloric Acid Php 526,624.56
Sodium Hydroxide Php 1,227,895.02
Pepsin Php 1,742,198.19
Acetic Acid Php 1,223,029.83
TOTAL RAW MATERIAL COST Php 12,387,747.60

357
XXIV. SCHEDULE N-2

A. Labor cost
Estimating labor requirements as a function of plant capacity is based on

adding the various principal processing steps on the flow sheet. In this method, a

process step is defined as any unit operation, unit process, or combination thereof

that takes place in one or more units of grinding, extracting, fermenting, filtering,

distilling, etc.

From Material Balance: The daily capacity of this collagen hydrolysate

plant is 1,400kg.

Using Figure 6-9 page 265 of Plant Design and Economics for Ch.E., 5th

Ed. by Peters, Timmerhaus, and West, the operating labor by using line B (average

conditions) is,

17 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒 ∙ ℎ𝑜𝑢𝑟𝑠
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐿𝑎𝑏𝑜𝑟 =
𝑑𝑎𝑦 ∙ 𝑝𝑟𝑜𝑐𝑒𝑠𝑠 𝑠𝑡𝑒𝑝

𝑵𝒐. 𝒐𝒇 𝑷𝒓𝒐𝒄𝒆𝒔𝒔 𝑺𝒕𝒆𝒑𝒔 = 𝟏𝟕 𝒑𝒓𝒐𝒄𝒆𝒔𝒔𝒆𝒔

By adapting the minimum wage per day of Php 311.00 (Source: DOLE

National Wages and Productivity Comission, August 2018)

𝑃ℎ𝑝 311.00 1 𝑠ℎ𝑖𝑓𝑡

𝐶𝑜𝑠𝑡 𝑝𝑒𝑟 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒 ∙ ℎ𝑜𝑢𝑟 = ( )
𝑠ℎ𝑖𝑓𝑡 8 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒 ∙∙ ℎ𝑜𝑢𝑟

𝑃ℎ𝑝 38.88
=
𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒 ∙ ℎ𝑜𝑢𝑟

358
 The plant operation is 24 hours per day with 3 shifts wherein the employees

are to work for 8 hours per shift.

17 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒 ∙ ℎ𝑜𝑢𝑟 𝑃ℎ𝑝 38.88

( )( ) (17 𝑝𝑟𝑜𝑐𝑒𝑠𝑠𝑒𝑠)(3 𝑠ℎ𝑖𝑓𝑡𝑠)(60 𝑑𝑎𝑦𝑠)
𝑑𝑎𝑦 ∙ 𝑝𝑟𝑜𝑐𝑒𝑠𝑠 𝑠𝑡𝑒𝑝 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒 ∙ ℎ𝑜𝑢𝑟

𝑳𝒂𝒃𝒐𝒓 𝑪𝒐𝒔𝒕 = 𝑷𝒉𝒑 𝟐, 𝟎𝟐𝟐, 𝟓𝟑𝟕. 𝟔𝟎

359
 SUMMARY OF FIGURES USED IN SCHEDULE N-2

Collagen Hydrolysate Production Capacity 1400 kg/day

17 employee-hours/day-process
Operating Labor
step
No. of Process Steps 17 process steps
Daily Minimum Wage Php 311.00
Cost per employee-hour Php 38.88/employee-hour
Number of shifts per day 3 shifts
Days of Operation 60 days
Labor Cost Php 2,022,537.60

360
XXV. SCHEDULE N-3

Utilities

The basic utilities in a production plant that usually contribute in the cost

estimation are cooling water and electricity which may vary directly depending on

the amount required, the plant location and the source.

SUMMARY OF UTILITIES
Water Php 112, 205.49
Electricity Php 357,778.11
Steam Php 388,182.17
TOTAL COST OF UTILITIES Php 858,165.77

361
 A. Water
The water consumption listed under utilities are used as process water and

cooling water.

Price: Php 43.20/cubic meter

Reference: General Santos City Water District
Source: http://gensanwater.gov.ph/our-services/

From Material Balance,

PROCESS WATER
EQUIPMENT
REQUIREMENT (per day)
Alkali Pretreatment (J-1) 2,931.75 kg 2.93175 cu. m.
Neutralization Tank (J-2) 663.03 kg 0.66303 cu. m.
Pepsin Digester (J-3) 3,227.29 kg 3.22729 cu. m.
Dialyzer Ultra-Filter (K-6) 5,048.89 kg 5.04889 cu. m.
TOTAL WATER
11,870.96 kg 11.87096 cu. m.
REQUIREMENT

𝑃ℎ𝑝 43.20 11.87096 𝑚3 𝐻2 𝑂

𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑜𝑐𝑒𝑠𝑠 𝐻2 𝑂 𝑐𝑜𝑠𝑡 = ( ) (60 𝑑𝑎𝑦𝑠)
𝑚3 𝑜𝑓 𝐻2 𝑂 𝑑𝑎𝑦

= 𝑃ℎ𝑝 30,769.53

362
From Energy Balance,

EQUIPMENT COOLING WATER REQUIRED

(per 60 days)
Neutralization Tank (J-2) 8,117.85 kg 8.11785 cu. m.

𝑃ℎ𝑝 43.20 8.11785 𝑚3 𝐻2 𝑂

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑜𝑙𝑖𝑛𝑔 𝑊𝑎𝑡𝑒𝑟 𝑐𝑜𝑠𝑡 = ( )
𝑚3 𝑜𝑓 𝐻2 𝑂 𝑑𝑎𝑦

= 𝑃ℎ𝑝 350.70

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑊𝑎𝑡𝑒𝑟 = 𝑃ℎ𝑝 30,769.53 + 𝑃ℎ𝑝 350.70 = 𝑃ℎ𝑝 31,120.23

363
 SUMMARY OF FIGURES USED IN SCHEDULE N-3

WATER
Water Price of Industrial Use Php 43.20/cu. m.
Total Process Water Requirements 11.87096 cu. m.
Days of Operation 60 days
Total Cooling Water Requirements 8.11785 cu. m.
Total Cost of Water Php 31,120.23

364
 B. Electricity

SOCOTECO II Rate: Php 7.1239/kWh

Change-Out Period: 60 days

For Pepsin Digester:

Power = 10hp ≈ 7.457kW

Operating Time = 1.69 hours

Electricity Cost for Pepsin Digester

1.69ℎ𝑜𝑢𝑟𝑠 𝑃ℎ𝑝 7.1239

= (7.457𝑘𝑊)(1 𝑢𝑛𝑖𝑡) ( )( ) (60 𝑑𝑎𝑦𝑠)
𝑑𝑎𝑦 𝑘𝑊 − ℎ𝑟

Electricity Cost for Pepsin Digester = Php 5,386.65

For Salt-out Tank:

Power = 0.75hp ≈ 0.559275kW

Operating Time = 22.5 hours

Electricity Cost for Salt-out Tank

22.5 ℎ𝑜𝑢𝑟𝑠 𝑃ℎ𝑝 7.1239

= (0.559275𝑘𝑊)(1 𝑢𝑛𝑖𝑡) ( )( ) (60 𝑑𝑎𝑦𝑠)
1 𝑑𝑎𝑦 𝑘𝑊 − ℎ𝑟

Electricity Cost for Salt-out Tank = Php 5,378.70

For Decanter Centrifuge:

Power = 7hp ≈ 5.2199kW

Operating Time = 24 hours

365
Electricity Cost for Decanter Centrifuge

24 ℎ𝑜𝑢𝑟𝑠 𝑃ℎ𝑝 7.1239

= (5.2199𝑘𝑊)(1 𝑢𝑛𝑖𝑡) ( )( ) (60 𝑑𝑎𝑦𝑠)
1 𝑑𝑎𝑦 𝑘𝑊 − ℎ𝑟

Electricity Cost for Decanter Centrifuge = Php 53,547.91

For Freeze Drier:

Power = 200hp ≈ 149.14kW

Operating Time = 3 hours

Electricity Cost for Freeze Drier

3ℎ𝑜𝑢𝑟𝑠 𝑃ℎ𝑝 7.1239

= (149.14𝑘𝑊)(1 𝑢𝑛𝑖𝑡) ( )( ) (60 𝑑𝑎𝑦𝑠)
1 𝑑𝑎𝑦 𝑘𝑊 − ℎ𝑟

Electricity Cost for Freeze Drier = Php 191,242.53

Assuming 40% of the total electricity cost of the four major equipment as the
electricity cost of the other equipment.

𝑇𝑜𝑡𝑎𝑙 𝐸𝑙𝑒𝑐𝑡𝑟𝑖𝑐𝑖𝑡𝑦 𝐶𝑜𝑠𝑡

= (𝑃ℎ𝑝 5,386.65 + 𝑃ℎ𝑝5378.70 + 𝑃ℎ𝑝53,547.91
+ 𝑃ℎ𝑝191,242.53)(1.40)

Total Electricity Cost = Php 357,778.11

366
 SUMMARY OF FIGURES USED IN SCHEDULE N-3

ELECTRICITY
SOCOTECO II Rate Php 7.12239/kWh
Change-out Period 60 days
Power Requirement of Pepsin Digester 7.457kW
Operating hours of Pepsin Digester 1.69 hours
No. of Digester Units 1 unit
Electricity Cost for Pepsin Digester Php 5,386.65
Power Requirement of Salt-out Tank 0.559275kW
Operating hours of Salt-out Tank 22.5 hours
No. of Salt-out Tank Units 1 unit
Electricity Cost for Salt-out Tank Php 5,378.70
Power Requirement of Decanter Centrifuge 5.2199kW
Operating hours of Decanter Centrifuge 24 hours
No. of Decanter Centrifuge Units 1 unit
Electricity Cost for Decanter Centrifuge Php 53,547.91
Power Requirement of Freeze Drier 149.14kW
Operating hours of Freeze Drier 3 hours
No. of Freeze Drier Units 1 unit
Electricity Cost for Freeze Drier Php 191,242.53
40% of Major Equipment
Electricity Cost for Other Equipment
Total Electricity Cost
Total Electricity Cost Php 357,778.11

367
 C. Steam
From Energy Balance,

EQUIPMENT STEAM REQUIREMENT (per day)

Pepsin Digester (J-3) 7,826.78 kg
Vacuum Evaporator (T-2) 1,975.80 kg
TOTAL STEAM REQUIREMENT 9,802.58 kg

Raw Material Cost

From Material and Energy Balance,

9802.58 𝑘𝑔 𝑠𝑡𝑒𝑎𝑚 1 𝑚3 𝑃ℎ𝑝 43.20

𝑅𝑎𝑤 𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙 𝐶𝑜𝑠𝑡 = ( )( 3 )
𝑑𝑎𝑦 1000 𝑘𝑔 𝑚 𝑜𝑓 𝐻2 𝑂

𝑷𝒉𝒑 𝟒𝟐𝟑. 𝟒𝟖
𝑹𝒂𝒘 𝑴𝒂𝒕𝒆𝒓𝒊𝒂𝒍 𝑪𝒐𝒔𝒕 = ⁄𝒅𝒂𝒚

Depreciable Boiler Cost

9,802.12 𝑘𝑔 𝑠𝑡𝑒𝑎𝑚 2.2 𝑙𝑏 𝑠𝑡𝑒𝑎𝑚 1 𝑑𝑎𝑦

𝑆𝑡𝑒𝑎𝑚 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 = ( )( )
𝑑𝑎𝑦 1 𝑘𝑔 𝑠𝑡𝑒𝑎𝑚 24 ℎ𝑜𝑢𝑟𝑠

𝒍𝒃 𝒔𝒕𝒆𝒂𝒎
𝑺𝒕𝒆𝒂𝒎 𝑪𝒂𝒑𝒂𝒄𝒊𝒕𝒚 = 𝟖𝟗𝟖. 𝟓𝟕
𝒉𝒐𝒖𝒓

(From PD & E, 5th Edition by Peters & Timmerhaus, Figure B-3, p. 809)

For 900 lb/hr and 265 psi, Purchased Cost of Boiler = $11,408.98

(From PD & E, 5th Edition by Peters & Timmerhaus, Table 7-8, p. 310)

Recovery period, for industrial steam generation = 22 years

368
 𝑈𝑆𝐷 11,408.98 1 𝑦𝑒𝑎𝑟 𝑃ℎ𝑝 50.59
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑏𝑙𝑒 𝐵𝑜𝑖𝑙𝑒𝑟 = ( )( )( )
22 𝑦𝑒𝑎𝑟𝑠 270 𝑑𝑎𝑦𝑠 1 𝑈𝑆𝐷

𝑷𝒉𝒑𝟐𝟏𝟑𝟕. 𝟕𝟏
𝑪𝒐𝒔𝒕 𝒐𝒇 𝑫𝒆𝒑𝒓𝒆𝒄𝒊𝒂𝒃𝒍𝒆 𝑩𝒐𝒊𝒍𝒆𝒓 = ⁄𝒅𝒂𝒚

Power Generation Cost

From Material and Energy Balance,

𝑘𝑔 𝑠𝑡𝑒𝑎𝑚 1 𝑑𝑎𝑦
𝑆𝑡𝑒𝑎𝑚 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 = (9,802.12 )( )
𝑑𝑎𝑦 86400 𝑠𝑒𝑐

𝑘𝑔 𝑠𝑡𝑒𝑎𝑚⁄
= 0.1135 𝑠𝑒𝑐

𝑘𝑔 𝑠𝑡𝑒𝑎𝑚
1 𝐵𝑜𝑖𝑙𝑒𝑟 𝐻𝑜𝑟𝑠𝑒𝑝𝑜𝑤𝑒𝑟 = 𝑒𝑛𝑒𝑟𝑔𝑦 𝑛𝑒𝑒𝑑𝑒𝑑 𝑟𝑜 𝑝𝑟𝑜𝑑𝑢𝑐𝑒 15.65
ℎ𝑟

0.1135𝑘𝑔 𝑠𝑡𝑒𝑎𝑚 3600 𝑠𝑒𝑐 1 𝐵𝑜𝑖𝑙𝑒𝑟 𝐻𝑃

𝑇ℎ𝑒𝑟𝑒𝑓𝑜𝑟𝑒, ( )( ) = 26.11𝐻𝑃
𝑠𝑒𝑐 1 ℎ𝑟 𝑘𝑔 𝑠𝑡𝑒𝑎𝑚⁄
15.65 ℎ𝑟

From Hurst Boiler and Welding Company Inc.,

Boiler Horsepower = 30HP = 22.3710kW

SOCOTECO II Rate: Php 7.1239/kWh

Change-Out Period: 60 days

24 ℎ𝑜𝑢𝑟𝑠 𝑃ℎ𝑝 7.1239

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑃𝑜𝑤𝑒𝑟 𝐺𝑒𝑛𝑒𝑟𝑎𝑡𝑖𝑜𝑛 = (22.3710𝑘𝑊) ( )( )
1 𝑑𝑎𝑦 𝑘𝑊ℎ

𝐶𝑜𝑠𝑡 𝑜𝑓 𝑃𝑜𝑤𝑒𝑟 𝐺𝑒𝑛𝑒𝑟𝑎𝑡𝑖𝑜𝑛 = 𝑃ℎ𝑝 3,824.85

369
Hence,

𝑃ℎ𝑝 423.48 𝑃ℎ𝑝 2137.71 𝑃ℎ𝑝 3824.85

+ +
𝑑𝑎𝑦 𝑑𝑎𝑦 𝑑𝑎𝑦
𝑆𝑡𝑒𝑎𝑚 𝐶𝑜𝑠𝑡 =
𝑘𝑔
9802.58
𝑑𝑎𝑦

𝑃ℎ𝑝 0.66
𝑆𝑡𝑒𝑎𝑚 𝐶𝑜𝑠𝑡 = ⁄𝑘𝑔 𝑠𝑡𝑒𝑎𝑚

Therefore,

𝑃ℎ𝑝 0.66 9802.58 𝑘𝑔 𝑠𝑡𝑒𝑎𝑚

𝑇𝑜𝑡𝑎𝑙 𝑆𝑡𝑒𝑎𝑚 𝐶𝑜𝑠𝑡 = ( )( ) (60 𝑑𝑎𝑦𝑠)
𝑘𝑔 𝑠𝑡𝑒𝑎𝑚 𝑑𝑎𝑦

𝑻𝒐𝒕𝒂𝒍 𝑺𝒕𝒆𝒂𝒎 𝑪𝒐𝒔𝒕 = 𝑷𝒉𝒑 𝟑𝟖𝟖, 𝟏𝟖𝟐. 𝟏𝟕

370
 SUMMARY OF FIGURES USED IN SCHEDULE N-3

STEAM
Water Price for Industrial Use Php 43.20/ cu. m
Total Steam Requirement for Processes 9802.58kg/day
Density of Water 1000 kg/ cu. m
Mass Unit Conversion Factor 2.2 lb/kg
Time Unit Conversion Factor 24 hours/day
Steam Cost per day Php6469.71
Steam Capacity 900lb/hr
Purchased Cost of Boiler for 900 lb/hr and 265 psi $11,408.98
Recovery Period for Industrial Steam Generation 22 years
Annual Days of Operation 270 days/year

371
XXVI. EXHIBIT AA-1

DIRECT PRODUCTION COST

Cost (Php) /kg Collagen Schedule
Raw Material Php 146.45 AA-1
Operating Labor Php 24.08 AA-2
Direct Supervisory and Clerical Labor Php 3.62 AA-3
Utilities Php 9.25 AA-4
Maintenance and Repair Php 8.58 AA-5
Operating Supplies Php 1.29 AA-6
Laboratory Charges Php 3.61 AA-7
TOTAL COST Php 196.88

372
XXVII. SCHEDULE AA – 5

A. Maintenance and repair

The cost for maintenance and repair is necessary in order to keep an efficient

operating condition of the manufacturing plant. It includes the cost for labor,

materials and supervision.

6% (Purchased Equipment Delivered) from Peters and Timmerhaus 5th Ed., Table

6-18, p. 273

𝑀𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒 𝑎𝑛𝑑 𝑅𝑒𝑝𝑎𝑖𝑟

𝑃ℎ𝑝 54,058,419.63 1 𝑦𝑒𝑎𝑟

= 0.06 ( )( )
𝑦𝑒𝑎𝑟 378,000 𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

𝑃ℎ𝑝 8.58
𝑀𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒 𝑎𝑛𝑑 𝑅𝑒𝑝𝑎𝑖𝑟 = ⁄𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

373
 SUMMARY OF FIGURES IN SCHEDULE AA-5

Total Cost of Purchased Equipment Php 54,058,419.63

Fraction of Cost for Maintenance and
6% of Purchased Equipment Delivered
Repair
Total Production Capacity 378,000 kg/year
Maintenance and Repair Cost per
Php 8.58
kilogram Collagen

374
XXVIII. SCHEDULE AA – 6

A. Operating supplies
Operating supplies are those miscellaneous items that cannot be considered

as raw materials or maintenance and repairs materials but are necessary to keep the

process functionality efficient. These include items such as charts, lubricants, test

chemicals, custodial supplies, etc.

15% (Maintenance and Repair) from Peters and Timmerhaus 5th Ed., Table 6-18,

p. 273

𝑃ℎ𝑝 8.58
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑆𝑢𝑝𝑝𝑙𝑖𝑒𝑠 = 0.15 ( )
𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

𝑃ℎ𝑝 1.29
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑆𝑢𝑝𝑝𝑙𝑖𝑒𝑠 = ⁄𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

375
 SUMMARY OF FIGURES USED IN SCHEDULE AA-6

Total Cost of Maintenance and Repair Php 8.58

Fraction of Cost for Operating
15% of Maintenance and Repair
Supplies
Operating Supplies Cost per kilogram
Php 1.29
Collagen

376
XXIX. SCHEDULE AA-7

Laboratory charges

Laboratory charges are the costs of various laboratory tests for control

operations and for product-quality control. It is estimated to be 15% of the

operating labor.

15% (Operating Labor) from Peters and Timmerhaus 5th Ed., Table 6-18, p.

273.

𝑃ℎ𝑝 24.08
𝐿𝑎𝑏𝑜𝑟𝑎𝑡𝑜𝑟𝑦 𝐶ℎ𝑎𝑟𝑔𝑒𝑠 = 0.15 ( )
𝑘𝑔 𝑐𝑜𝑙𝑎𝑔𝑒𝑛

𝑃ℎ𝑝 3.62
𝐿𝑎𝑏𝑜𝑟𝑎𝑡𝑜𝑟𝑦 𝐶ℎ𝑎𝑟𝑔𝑒𝑠 =
𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

377
 SUMMARY OF FIGURES USED IN SCHEDULE AA-7

Operating Labor Cost per kilogram

Php 24.08
collagen

Fraction of Cost for Laboratory

15% of Operating Labor Cost
Charges

Laboratory Charges Cost per

Php 3.62
kilogram collagen

378
XXX. EXHIBIT-BB

Fixed charges

Fixed charges are expenses which are always incorporated in an industrial plant

whether or not the manufacturing process is in operation. These expenses are direct

function of the capital investment. These include costs for depreciation, local

property taxes, insurance, and rent.

379
 Cost (Php)/kg collagen Schedule
Depreciation Php 11.92 BB-1
Local Taxes Php 3.58 BB-2
Insurance Php 1.00 BB-3
Total Fixed Charges Php 16.49

380
XXXI. SCHEDULE BB-1

Depreciation

Depreciation is the decrease in the value of buildings, equipment, and other

material objects comprising a manufacturing plant. It is assumed to occur

throughout the usual life of the material. Depreciation rates are very important in

determining the amount of income tax.

Using Straight-Line Method:

𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛

𝐷𝑖𝑟𝑒𝑐𝑡 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 − 𝑆𝑎𝑙𝑣𝑎𝑔𝑒 𝑉𝑎𝑙𝑢𝑒 1 𝑦𝑒𝑎𝑟

= ( )( )
𝐿𝑒𝑛𝑔𝑡ℎ 𝑜𝑓 𝑆𝑡𝑡𝑟𝑎𝑖𝑔ℎ𝑡 𝐿𝑖𝑛𝑒 𝑅𝑒𝑐𝑜𝑣𝑒𝑟𝑦 𝑃𝑒𝑟𝑖𝑜𝑑 𝑖𝑛 𝑌𝑒𝑎𝑟𝑠 364,800 𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

𝑃ℎ𝑝54,058,419.63 − 𝑃ℎ𝑝 0.00 1 𝑦𝑒𝑎𝑟

𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 = ( )( )
12 𝑦𝑒𝑎𝑟𝑠 378,000 𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

𝑃ℎ𝑝 11.92
𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 = ⁄𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

381
 SUMMARY OF FIGURES USED IN SCHEDULE BB-1

Direct Initial Investment Php 54,058,419.63

Total Production Capacity 378,000 k/year
Recovery Period 12 years
Depreciation Cost per kilogram Collagen Php 11.92

382
XXXII. SCHEDULE BB-2

Local taxes

The magnitude of local property taxes depends on the particular locality of

the plant and the regional laws. Annual property taxes for plants in highly populated

areas are ordinarily in the range of 1%-4% of the fixed capital investment.

2.5% (Purchased Equipment Delivered) from Peters and Timmerhaus 5th Ed.,

Table 6-18, p. 273

𝑃ℎ𝑝 54,058,419.63 1 𝑦𝑒𝑎𝑟

𝐿𝑜𝑐𝑎𝑙 𝑇𝑎𝑥𝑒𝑠 = 0.025 ( )( )
𝑦𝑒𝑎𝑟 378,000𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

𝑃ℎ𝑝 3.58
𝐿𝑜𝑐𝑎𝑙 𝑇𝑎𝑥𝑒𝑠 = ⁄𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

383
 SUMMARY OF FIGURES USED IN SCHEDULE BB-2

Total Cost of Purchased Equipment Delivered Php 54,058,419.63

Total Production Capacity 378,000 kg/year
2.5% of Fixed Capital
Fraction of Cost for Local Taxes
Investment
Local Taxes Cost per kilogram Collagen Php 3.58

384
XXXIII. SCHEDULE BB-3

Insurance

Insurance rates are independent on the type of process being carried out in

the manufacturing operation and on the extent of available protection facilities.

These rates amount to about 0.7% of the fixed capital investment per year.

0.70% (Purchased Equipment Delivered) from Peters and Timmerhaus 5th Ed.,

Table 6-18, p.273

𝑃ℎ𝑝 54,058,419.63 1 𝑦𝑒𝑎𝑟

𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒 = 0.007 ( )( )
𝑦𝑒𝑎𝑟 378,000𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

𝑃ℎ𝑝 1.00
𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒 = ⁄𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

385
 SUMMARY OF FIGURES USED IN SCHEDULE BB-3

Total Cost of Purchased Equipment Delivered Php 54,058,419.63

Total Production Capacity 378,000 kg/year
0.70% of Fixed Capital
Fraction of Cost for Insurance
Investment
Local Taxes Cost per kilogram Collagen Php 1.00

386
XXXIV. EXHIBIT CC

Plant Overhead Cost

Plant overhead cost covers expenditures required for routine plant services

but is necessary for many of the general plant services such as non-manufacturing

machinery, equipment, and building, the fixed charges and the direct costs for these

items, and all the labor cost directly connected to production operation. The plant

overhead cost may range from 50%-70% of the total costs for operating labor, direct

supervisory and clerical labor, and maintenance and repair.

60% (Operating Labor + Direct Supervisory & Clerical Labor + Maintenance &

Repair) from Peters and Timmerhaus 5th Ed., Table 6-18, p. 274.

𝑃𝐿𝑎𝑡 𝑂𝑣𝑒𝑟ℎ𝑒𝑎𝑑 𝐶𝑜𝑠𝑡

= 0.60(𝑂𝑝𝑒𝑟𝑎𝑖𝑛𝑔 𝐿𝑎𝑏𝑜𝑟

+ 𝐷𝑖𝑟𝑒𝑐𝑡 𝑆𝑢𝑝𝑒𝑟𝑣𝑖𝑠𝑜𝑟𝑦 𝑎𝑛𝑑 𝐶𝑙𝑒𝑟𝑖𝑐𝑎𝑙 𝐿𝑎𝑏𝑜𝑟

+ 𝑀𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒 𝑎𝑛𝑑 𝑅𝑒𝑝𝑎𝑖𝑟)

𝑃ℎ𝑝 24.08 + 𝑃ℎ𝑝 3.62 + 𝑃ℎ𝑝 8.58

𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒 = 0.60 ( )
𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

𝑃ℎ𝑝 21.77
𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒 = ⁄𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

387
 SUMMARY OF FIGURES USED IN SCHEDULE CC

Operating Labor Cost per kilogram

Php 24.08
collagen
Direct Supervisory and Clerical Labor
Php 3.62
per kilogram collagen
Maintenance and Repair per kilogram
Php 8.58
collagen
60% of the total costs for Operating
Labor, Direct Supervisory and
Fraction of Plant Overhead Cost
Clerical Labor, and Maintenance
and Repair
Plant Overhead Cost per kilogram of
Php 21.77
Collagen

388
XXXV. EXHIBIT DD

General Expenses

The general expenses comprise mainly of indirect cost on production. These

may be classified as (1) administrative expenses, (2) distribution and marketing

expenses, and (3) research and development expenses. General expenses may

represent 15%-25% of the total product cost.

389
 SUMMARY OF GENERAL EXPENSES
Cost (Php)/
Schedule
kg Collagen
Administrative Cost Php 7.26 DD-1
Distribution and Marketing Cost Php 31.74 DD-2
Research and Development Cost Php 14.43 DD-3

TOTAL GENERAL EXPENSES Php 53.43

390
XXXVI. SCHEDULE DD-1

Administrative Cost

Administrative cost are expenses connected with top-management or

administrative activities. These covers the salaries and wages for administrators,

secretaries, accountants, and other similar workers, along with cost for office

supplies and equipment, outside communications, administrative buildings, and

other overhead items related with administrative activities.

20% (OL+DS&CL+M&R) from Peters and Timmerhaus 5th Ed., Table 6-18, p.

274.

𝐴𝑑𝑚𝑖𝑛𝑖𝑠𝑡𝑟𝑎𝑡𝑖𝑣𝑒 𝐶𝑜𝑠𝑡

= 0.20(𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐿𝑎𝑏𝑜𝑟

+ 𝐷𝑖𝑟𝑒𝑐𝑡 𝑆𝑢𝑝𝑒𝑟𝑣𝑖𝑠𝑜𝑟𝑦 𝑎𝑛𝑑 𝐶𝑙𝑒𝑟𝑖𝑐𝑎𝑙 𝐿𝑎𝑏𝑜𝑟

+ 𝑀𝑎𝑖𝑛𝑡𝑒𝑛𝑎𝑛𝑐𝑒 𝑎𝑛𝑑 𝑅𝑒𝑝𝑎𝑖𝑟)

𝑃ℎ𝑝 24.08 + 𝑃ℎ𝑝 3.62 + 𝑃ℎ𝑝 8.58

𝐴𝑑𝑚𝑖𝑛𝑖𝑠𝑡𝑟𝑎𝑡𝑖𝑣𝑒 𝐶𝑜𝑠𝑡 = 0.20 ( )
𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

𝑃ℎ𝑝 7.26
𝐴𝑑𝑚𝑖𝑛𝑖𝑠𝑡𝑟𝑎𝑡𝑖𝑣𝑒 𝐶𝑜𝑠𝑡 = ⁄𝑘𝑔 𝐶𝑜𝑙𝑙𝑎𝑔𝑒𝑛

391
 SUMMARY OF FIGURES USED IN SCHEDULE DD-1

Operating Labor Cost per kilogram Php 24.08

collagen
Direct Supervisory and Clerical Labor Php 3.62
per kilogram collagen
Maintenance and Repair per kilogram Php 8.58
collagen
Fraction of Administrative Cost 20% of the total costs for Operating
Labor, Direct Supervisory and Clerical
Labor, and Maintenance and Repair
Plant Overhead Cost per kilogram of Php 7.26
Collagen

392
XXXVII. SCHEDULE DD-2

Distribution and marketing cost

Distribution and marketing cost are expenses incurred in the process of

selling and distributing the finish products. These expenses vary widely from

different types of plants depending on the particular material being produced, other

product sold by the company, plant location, and company policies. These costs

usually range from 2%-20% of the total product cost.

11% (Total Product Cost) from Peters and Timmerhaus 5th Ed., Table 6-18, p. 274.

𝑇𝑃𝐶 = 𝑇𝑜𝑡𝑎𝑙 𝑀𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 + 𝐺𝑒𝑛𝑒𝑟𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠

𝐺𝑒𝑛𝑒𝑟𝑎𝑙 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠

= 𝐴𝑑𝑚𝑖𝑛𝑖𝑠𝑡𝑟𝑎𝑡𝑖𝑣𝑒 𝐶𝑜𝑠𝑡 + 𝐷𝑖𝑠𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑎𝑛𝑑 𝑀𝑎𝑟𝑘𝑒𝑡𝑖𝑛𝑔

+ 𝑅𝑒𝑠𝑒𝑎𝑟𝑐ℎ 𝑎𝑛𝑑 𝑑𝑒𝑣𝑒𝑙𝑜𝑝𝑚𝑒𝑛𝑡

𝑇𝑃𝐶 = 𝑇𝑜𝑡𝑎𝑙 𝑀𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑖𝑛𝑔 𝐶𝑜𝑠𝑡

+ [𝐴𝑑𝑚𝑖𝑛𝑖𝑠𝑡𝑟𝑎𝑡𝑖𝑣𝑒 𝐶𝑜𝑠𝑡

+ 𝐷𝑖𝑠𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑎𝑛𝑑 𝑀𝑎𝑟𝑘𝑒𝑡𝑖𝑛𝑔 𝐶𝑜𝑠𝑡(11% 𝑜𝑓 𝑇𝑃𝐶)

+ 𝑅𝑒𝑠𝑒𝑎𝑟𝑐ℎ 𝑎𝑛𝑑 𝐷𝑒𝑣𝑒𝑙𝑜𝑝𝑚𝑒𝑛𝑡 𝐶𝑜𝑠𝑡(5% 𝑜𝑓 𝑇𝑃𝐶) ]

𝑇𝑃𝐶 = 𝑇𝑜𝑡𝑎𝑙 𝑀𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 + 𝐴𝑑𝑚𝑖𝑛𝑖𝑠𝑡𝑟𝑎𝑡𝑖𝑣𝑒 𝐶𝑜𝑠𝑡 + 16% 𝑇𝑃𝐶

𝑇𝑃𝐶 − 0.16𝑇𝑃𝐶 = 𝑇𝑜𝑡𝑎𝑙 𝑀𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 + 𝐴𝑑𝑚𝑖𝑛𝑖𝑠𝑡𝑟𝑎𝑡𝑖𝑣𝑒 𝐶𝑜𝑠𝑡

0.84𝑇𝑃𝐶 = 𝑇𝑜𝑡𝑎𝑙 𝑀𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 + 𝐴𝑑𝑚𝑖𝑛𝑖𝑠𝑡𝑟𝑎𝑡𝑖𝑣𝑒 𝐶𝑜𝑠𝑡

393
𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝐶𝑜𝑠𝑡(𝑇𝑃𝐶)

𝑇𝑜𝑡𝑎𝑙 𝑀𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑖𝑛𝑔 𝐶𝑜𝑠𝑡 + 𝐴𝑑𝑚𝑖𝑛𝑖𝑠𝑡𝑟𝑎𝑡𝑖𝑣𝑒 𝐶𝑜𝑠𝑡

=
0.84

𝑃ℎ𝑝 235.14 + 𝑃ℎ𝑝 7.26

𝑇𝑃𝐶 =
0.84

𝑃ℎ𝑝 288.57
𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝐶𝑜𝑠𝑡 (𝑇𝑃𝐶) =
𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

𝑃ℎ𝑝 288.57
𝐷𝑖𝑠𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑎𝑛𝑑 𝑀𝑎𝑟𝑘𝑒𝑡𝑖𝑛𝑔 = 0.11 ( )
𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

𝑃ℎ𝑝 31.74
𝐷𝑖𝑠𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑎𝑛𝑑 𝑀𝑎𝑟𝑘𝑒𝑡𝑖𝑛𝑔 =
𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

394
 SUMMARY OF FIGURES USED IN SCHEDULE DD-2

Total Manufacturing Cost Php 235.14

Administrative Cost Php 7.26
Total Product Cost Php 288.57
Fraction of Distribution and Marketing 11% of Total Product Cost per
Cost kilogram Collagen
Distribution and Marketing Cost Php 31.74

395
XXXVIII. SCHEDULE DD-3

Research and Development

In order for a company to remain in a competitive industrial position and to

prevent from being overtaken by competitors, they allot a certain amount for

research and development expenses. These encompass salaries and wages for all

personnel directly connected with this type of work, fixed and operating expenses

for all machinery and equipment involved, cost for materials and supplies, direct

overhead expense, and other costs linked to research and development.

0.05% (Total Product Cost) from P&T 5th Ed., Table 6-18, p. 274.

𝑃ℎ𝑝 288.57
𝑅𝑒𝑠𝑒𝑎𝑟𝑐ℎ 𝑎𝑛𝑑 𝐷𝑒𝑣𝑒𝑙𝑜𝑝𝑚𝑒𝑛𝑡 = 0.05 ( )
𝑘𝑔 𝑐𝑜𝑙𝑙𝑎𝑔𝑒𝑛

𝑃ℎ𝑝 14.43
𝑅𝑒𝑠𝑒𝑎𝑟𝑐ℎ 𝑎𝑛𝑑 𝐷𝑒𝑣𝑒𝑙𝑜𝑝𝑚𝑒𝑛𝑡 =
𝑘𝑔 𝑐𝑜𝑙𝑎𝑔𝑒𝑛

396
 SUMMARY OF FIGURES USED IN SCHEDULE DD-3

Total Production Cost Php 288.57

5% of Total Product Cost per
Fraction of Research and Development
kilogram Collagen
Research and Development Cost Php 14.43

397