Entrepreneurship Y4 PDF

Republic of the Philippines
Department of Education
PUBLIC TECHNICAL -VOCATIONAL
HIGH SCHOOLS
Unit of Competency : Finalize Evaluated Business Plan

Module Title : Finalizing Evaluated Business Plan
Module No. 1
TABLE OF CONTENTS
Module Title: Finalizing Evaluated Business Plan 1
How to Use this Module 1
Summary of Learning Outcomes 2
Pre-Test 3
Lesson 1 – Finalizing Evaluated Business Plan 4
Let Us Study 4
Sample of a Business Plan 5
Rubrics 20
Let Us Remember 23
How Much Have You Learned? 24
Post-Test 24
Reference 25
Key to Correction 26
Acknowledgement 27
HOW TO USE THIS MODULE
Welcome to the Module “Finalizing Evaluated Business
Plan/s”. This module contains instructional materials and activities
for you to complete.
The unit of competency “Finalize Evaluated Business Plan”

contains the knowledge, skills and attitudes required for the course
Entrepreneurship.
You are required to go through a series of learning activities in

order to complete each of the learning outcomes of the module. Follow
these activities on your own and answer the Self-Check at the end of
each learning activity.
If you have questions, don’t hesitate to ask your teacher for
assistance.
1
COURSE : ENTREPRENEURSHIP IV
UNIT OF COMPETENCY : Finalize Evaluated Business

Plan/s
MODULE TITLE : Finalizing Evaluated Business

Plan/s
MODULE DESCRIPTION : This module covers the

knowledge skills and attitudes
required in finalizing evaluated
businessplan.
SUGGESTED DURATION : 10 Hours
SUMMARY OF LEARNING OUTCOMES:
Upon completion of the module the students should be able to:
LO1. Finalize Evaluated Business Plan/s
2
WHAT WILL YOU LEARN?
At the end of this module, you should be able to:

1. Finalize the evaluated business plan based on
the criteria set.
WHAT DO YOU ALREADY KNOW?

PRE TEST
Let us find how much you have already know about the
process of evaluating a business plan. Write the letter only
of your answer in your quiz notebook?
1. Description of the target market is formed in the_________ part

of the business plan.
a. Marketing Plan
b. Marketing Strategies
c. Operating Strategies
d. Production Strategies
2. Detailed description of products or services is in what part of
the business plan?
a. Marketing plan
b. Production and technical plan
c. Operation plan
d. Organization and management
3. Which part of the business plan describes how the business has
solved the problems?
a. Statement of vision
b. The marketing plan
c. The problem need
d. Production technical plan
4. Which part of the business plan presents the data on how the
products/service will be further developed.
a. Financial Plan
b. Marketing Plan
c. Production Plan
d. Operation and technical Plan
5. What part of the business plan presents a clear statement of
values critical to culture, integrity and activities of the
business?
a. Marketing plan
b. Production plan
c. Operational plan
d. Statement of vision, mission and values
3
LESSON I
FINALIZING EVALUATED BUSINESS PLAN
WHAT IS THIS LESSON ABOUT?
This lesson deals with how to critically evaluate a

business plan in order to come up with a final form.
At the end of the lesson, you should be able to:
1. Finalize the evaluated business plan based on the set

of criteria.
2. Appreciate the importance of using business
plan.
LET US STUDY
WORDS TO STUDY
Business Plan is a step by step guide in the thorough operation

of the business enterprise.
Enterprise is a project activity commercial or industrial. It
may also be an organizational activity.
Assessment Tool is an instrument used to evaluate a performance.
Evaluation is a rigorous analysis of completed or ongoing
activities that determine or support management
accountability, effectiveness and efficiency.
Component is a uniquely identifiable input, part, piece,
assembly or sub- assembly, system or sub –
system that:
1. is required to complete or finish an activity,
item or job.
2. Performs a distinctive and necessary function
in the operation of a system or;
3. is identified to be included as a part of a
finished, packaged and labeled item.
Criteria is the statement of need, rules, standards or tests
that must be used in evaluating a decision, idea,
opportunity, program, projects, etc. to form
correct judgment intended goal.
4
Let us study an example of business plan with complete parts for you
to use as benchmark in evaluating your fellow student’s business
plan.
I. Executive Summary
Pumpkin Sorbet is cooperative in nature. It is to be run by the

students themselves. Its initial capital for the first month of operation of PhP
90,000.00 will be coming from the student-owners by means of their investments as
their stock in the business and from fund-raising activities as well. It is a food stall
located inside the campus. Sorbet as the main product is to be manufactured by the
proponents and to be sold and distributed to the target markets of 530 students
daily include the MBHS students, the elementary pupils undergoing the feeding
programs and selected hospitals in District II. Since the main product is made from
pumpkin or squash, it promotes healthy, affordable and satisfying pumpkin
derivative products. The proponents made an agreement with the MBHS
administration on how they can be of help on the promotion of nutrition and on
increasing the agricultural market especially on “Pagkaing Sapat Program”. They are
currently on negotiation with the Principals of Cupang, Buli, and Alabang
Elementary schools regarding the inclusion of the pumpkin sorbet in the dietary
supplement among the students in the school’s feeding program. Since it is a
vegetable-flavoured ice cream, it contains lots of nutrients like beta-carotenes and
lutein.
Pumpkin Sorbet aims to be the leading producer and provider of
nutritious and affordable home-made ice cream inside the campus of MBHS and
other Elementary schools near the said school. The total population of MBHS is
3,219 students and based on the registered school nurse, about 60 of them is
malnourished. Estimating 10% of the population will buy the product. The student-
owners will be trained and guided before they handle the business to avoid lapses
and misconceptions. They will be supervised by their Business Education mentors.
The management and operation of Pumpkin Sorbet starts from
inventory and estimation of the volume of ice cream to be produced daily. Second is
purchasing of the ingredients and raw materials needed to complete the preparation
of the product. Third are production, packaging and freezing of the ice cream. Lastly,
marketing and selling of the product. As a food stall, it ensures safety and sanitation
of its business structures and cleanliness of the product itself. It aims to lower the
price of the ice cream without sacrificing its quality. It has a shelf life of five days.
Since
Since it is new in the business line of MBHS, it initially aims to
capture 10% of the existing market shares which is currently dominated by school
canteen’s Kyla’s Ice Cream. And Creamline Ice Cream and Dan Eric’s Ice Cream
which is located within the Espeleta Street.
Pumpkin Sorbet is highly feasible, doable and socially desirable. It
will help both the school and the students. This will serve as learning laboratory for
the students of MBHS especially to the newbie. It will also be the inspiration for the
aspiring business men to be a successful entrepreneur. The proponents of the
business advocates being the leading promoter of agricultural products specifically
squash. This will help increase the demands of pumpkin or squash, thereby
economically promotes livelihood among the squash growing farmers in the area.
5
II. Overview of the Business
I. Pumpkin Sorbet
II. Pumpkin Sorbet is both the business name and the name of its primary
products. It is cooperative in nature. Specifically, it will produce a
pumpkin-flavoured ice sorbet that will be dressed with sprinkles,
marshmallows and peanuts that will surely fit and guarantee clientele’s
satisfaction. It combines innovativeness and creativity in product
concepts such as ice cream with pumpkin as the main ingredient.
Dominating the existing ice cream businesses in Buli as well as in
Muntinlupa will be its main thrust.
III. It envisions to be the leading provider of high quality but affordable ice cream
in Muntinlupa. Continues innovation of the product will be processed to
supply the needs of Muntinlupeňos. Also, it will help ease the
malnutrition in Muntinlupa through the help of pumpkin-flavoured ice
cream and somehow help the squash farmers in terms of increasing the
consumption and demand of squash in the city.
6
III. Business Plan
The Needs
A. Malnutrition is one of the major problems, Filipinos school children

are facing nowadays. Malnutrition means lacking of the right
nutrition needed by the body resulting which may result to poor
academic achievements. This has been correlated with educational
research that malnutrition affects learning abilities of the child. It is
also one of the reasons behind why we have unstable economy. Being
in the public school, the proponents understood most of their
classmates were not eating vegetable-rich products. By these
assumptions, the proponents come up with a concept that will not
only satisfy the clientele’s taste but also sustain the nutrients they
need to be healthy aside from the fact, that using squash as main
ingredient in foods will also boosts the agricultural demand for the
squash. This will benefit the squash farmers in the country. This will
help us save some money for the economy and may prevent
importation this vegetable.
B. Pumpkin Sorbet, a pumpkin-flavoured ice cream that will surely

sustain the needs of the people, especially the poor children. Children
today usually prefer meat more than vegetables. Ice cream is an all
time Filipino favourite; this prompted the proponents to innovate the
usual fruity ice-cream flavours with the use of vegetable such as
pumpkin. The product has almost the same creaminess, puffiness,
and consistency in texture as the commercially available ice-cream
and will surely entice the taste of even the carnivorous children.
Unknowingly they are already including vegetables in their diet.
C. The proponents believe that the clientele will support the product
because of its unique flavour and appearance. With this, Pumpkin
Sorbet will be instrumental in helping alleviate malnutrition cases in
the country especially those who are in the public school system. This
may also serve as basis for other entrepreneurs to discover and
innovate more nutritious vegetable flavoured foods other than ice
cream; just like for example bitter gourd, eggplant and other
vegetables. The proponents believe that this will not only address the
health problems of the country but the agricultural economy as well.
7
IV. Vision, Mission and Values
Vision
In the name of good customer service, Pumpkin Sorbet envisions as

the leading advocate of healthy and natural food products, working with
squash farmers cooperative and the leading providers of the best pumpkin
ice-cream by the year 2010.
Mission
Pumpkin Sorbet aims to produce and sell healthy, clean, nutritious

and high quality sorbets for the clienteles and cooperatively works with the
squash farmers in the city of Muntinlupa. This is through the dedication
and passion of the management to produce this kind of product. In line with
these, it sets a mission to achieve at least 20% return on equity after two
years of operation.
Values
Pumpkin Sorbet as a business, commits to give its customers the best

product it can serve. It will maintain its high standard of hard work, hygiene
and sanitation in food preparation and handling and also the proper
grooming and etiquette of the owners and personnel. The dedicated
management will give their best to deliver with full sincerity and honesty for
a better customer service. It will give a prompt, fast, accurate and best
service to its clients. The management also sets to create a support system
for the squash growing farmers in order to economically improve their
standard of living.
8
V. Market Profile
A. Research and Analysis
Today’s sorbet stalls are believed to have a little improvement for

customer’s satisfaction. The proponents decided that they must undergo a
careful observation in the business location. The management also
underwent an official interview with the owners of current ice cream stalls in
Buli. The proponents found out that customers are not that satisfied with the
ice cream sold along the Espeleta Street and most of the products are not
that nutritious to sustain body needs. The management believes that action
must be taken primarily to make a new twist in preparing and serving ice
creams that has very huge market in the nation.
The current status of squash growing farmers in the city where the
squash supply are to be taken was also observed and given attention in order
to support them when the business starts its operations.
With these premises, the proponents decided to produce pumpkin-
flavoured ice cream which will answer the needs of the students in the area.
The market will be four (4) Elementary Schools and one (1) Secondary
School. The target students are those who are malnourished and member of
feeding program.
B. Marketing Plan
Table 1
Number of Target Ice Cream Buyers per Consumer Group
Feeding Program Members
Alaban Sucat Buli Cupang
Populace MBHS Total
MBHS g ES ES ES
ES
Total
P
o
p
u
3,160 60 87 84 45 68 3,504
l
a
t
i
o
n
Daily 316 36 52 50 27 49 530
Monthly 6,952 792 1,144 1,100 594 1,078 11,660
Yearly 83,424 9,504 13,728 13,200 7,128 12,936 139,200
Based on the given consumer groups, the daily, monthly, and yearly
target buyers are reflected through the assumption that 10% from MBHS group will
buy ice cream from Pumpkin Sorbet and 60% from those feeding program members
will buy every three days. During summer vacation, Pumpkin Sorbet will only serve
their products in different hospitals where we can assure the sale and can help
patient in sustaining their health.
9
VI. Production/Technical Plan
A. Product Description
Pumpkin Sorbet is a business selling a pumpkin- flavoured sorbet. The finished

product will be placed in a plastic cup and depending on the consumers, they
will choose if they want their sorbet to have a dressing (sprinkles) or added
flavour. The product as researched was proven nutritious palatable. Today’s Ice
Creams are not that nutritious and of with poor quality. Pumpkin Sorbet made it
with a new twist by means of using vegetable like squash as the main ingredient.
The individual finished products will be package in a cup with design. There will
also be packaging for wholesale purchases
B. Operating Strategies
The business will produce a pumpkin sorbet station with high quality
contents and nutritious value as well. Pumpkin Sorbet will need raw
materials to produce the goods to be sold. These include All- Purpose Cream,
Condensed Milk, Cassava Starch, Cheese, Gelatine Powder, Powdered Milk,
Vanilla Essence, and the main ingredients, Pumpkin. The proponents will be
the one to produce the product. Raw materials will be purchased at Alabang
Market or Lianas Supermarket where we can assure the quality and the
aspects of perish ability. The proponents tried to interview the teachers and
some students by offering them a free taste and made a comment after.
During the operation, the business will think of more ideas on how to create
more appealing and attractive products.
C. Critical Risk
Table 2
Pumpkin Sorbet’s Position in the Market
Competitors Market Share Target
Kyla’s Ice Cream 35% 30%
Dan Eric’s Ice Cream 45% 40&
Cream Line Ice Cream 20% 20%
Pumpkin Sorbet 10%
Based on the table showed, there are three competitors who dominate
the market of Ice Cream in Buli. Pumpkin Sorbet aims 10% of the market share.
Through creativity, uniqueness and innovation, the management believe that it will
be achieved.
10
VII. Organizational Plan
A. Team Members
Figure 1: Organizational Chart
B. Contribution to the Business
Owners– it is responsible for the management and

accountability
of the business itself, at the same time they are the
ones who will produce
the product.
Sales Personnel – it is responsible for the advertisement,
selling
promotion of the product.
11
VIII. Operational Plan
A. Workflow
Pumpkin Sorbet has a very simple operational plan. It starts from

inventory and estimation of the volume of ice cream to be produced daily,
then Purchasing of Ingredients and raw materials needed. After purchasing,
the production, packaging and freezing. Lastly, the marketing or the selling
of the product.
B. Monitoring and Evaluation
Pumpkin Sorbet will manufacture at least thirteen (13) gallons of ice cream
per day. It takes less than an hour to prepare the mixtures before freezing.
The three (3) proponents divide the work among themselves. The production
hour will be done after classes so as not to affect their studies. Since the
shelf life is about 28 days, the possibility of producing for advance demand is
highly considered. It will supply four (4) Elementary Schools (gallons each)
and a Secondary School that will serve as its main market (4 gallons).
12
IX. Sustainability
I. Financial Plan
Pumpkin Sorbet will need at least PhP 90,000.00 to start its operation in the
market. This will be coming from the investments of the students who are willing to
be involved in entrepreneurial practice like this. Also, since two of the proponents
are Club Presidents and the other one is MBHS Chorale Leader, they may combine
their talents to conduct fund raising activities to increase the capital investment of
the business.
Table 3
Monthly Expenses of Pumpkin Sorbet
Product/Service Unit Price Quantity Total
Fixed Cost of Pumpkin Sorbet:
Rental PhP1,000.00 1 month PhP 1,000.00
Salaries 5,000.00 3 crews 15,000.00
Advertising 1,000.00 1 month 1,000.00
Depreciation Account- Freezer(Small) 13,000.00 1 Freezer 1,300.00
Depreciation Account- Blender 770.00 2 Blenders 140.00
Depreciation Account- Chairs and
1,800/set 2 sets 300.00
Tables
Depreciation Account- Tools and 2 set of tools &
900.00 180.00
Utensils utensils
Utility and Sanitation 1,500.00 1 month 1,500.00
PhP
(A)Total Fixed Cost
20,420.00
Variable Cost:
Raw Materials:
Plastic Spoons 25.00 66 packs 1,650.00
Packaging (Plastic Cups) 50.00/pack 66 packs 3,300.00
All Purpose Cream 38.50 572 tetra packs 22,022.00
Condensed Milk 36.50 286 cans 10,439.00
Alsa Gulaman 39.50 143 boxes 5648.50
Cassava Flour 25 1.5 kilo 37.50
Powdered Milk 41.50 57 packs 2,365.50
Vanilla Essence 14.00 95 bottles 1,330.00
Cheese 23.50 95 bar 2,232.50
Electricity 1,000.00 1 month 800.00
Communication Bills 800.00 1 month 600.00
Water Supply 600.00 1 month 400.00
Transportation 300.00 1 month 250.00
Miscellaneous 1,500.00 1 month 500.00
PhP
(B) Total Variable Cost
51,575.00
PhP
(A+B) Total Cost of Production
71,995.00
Table 3 shows the variable and fixed cost in the operation of Pumpkin
Sorbet. This will serve as basis for computing the breakeven point sales price and
volume. Based on the total FC & VC, the business is capable of producing 286
gallons per month.
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Table 4
PROJECTED REVENUE
Projected
Ice Projected
Volume Daily Monthly Yearly Projected
Cream Costing Volume
(in cups) Revenue Revenue Revenue
Flavour
Daily Monthly
C-5
PhP
Pumpkin M-2 530 PhP 3,710.00 11660 PhP 979,440.00
81,620.00
SP-7
LEGEND:
Cost – C
Mark-up - M
Sales price – SP
Table 5
MONTHLY PROJECTED COST & REVENUE
Jan Feb Mar Apr May Jun
81,620.0
Revenue 81,620.00 81,620.00 81,620.00 81,620.00 81,620.00
0
71,995.0
Cost 71,995.00 71,995.00 71,995.00 71,995.00 71,995.00
0
Projected
9,625.00 9,625.00 9,625.00 9,625.00 9,625.00 9,625.00
Net Profit
Jul Aug Sep Oct Nov Dec Total

81,620.00 81,620.00 81,620.00 81,620.00 81,620.00 PhP 979,440.00
81,620.00
71,995.00 71,995.00 71,995.00 71,995.00 71,995.00 71,995.00 PhP 863,940.00
9,625.00 9,625.00 9,625.00 9,625.00 9,625.00 9,625.00 PhP 283,500.00
Break-Even Guide
Total Revenue (TR) = Fixed Cost (FC) + Variable Cost (VC)
When TR is > then FC and VC means the business is earning profit.
When TR is < then the FC + VC means the business is losing.
When TR = then FC + VC, the business is break-even.
Table 5 shows the monthly projected cost &

revenue. As shown, the business projected Php 979,440.00 gross
sales for a year which is greater than the cost at Php 863,940.00.
thus, a net annual profit of Php 283,500.00. This is 32.81%% of the
total cost.
14
Table 6
Project Cost
PARTICULAR EQUITY LOAN TOTAL

Fixed Assets
Equipments PhP 6,440.00 PhP 15,000.00 PhP 21,440.00
TOTAL PhP 6,440.00 PhP 15,000.00 PhP 21,440.00
Other Assets
Rent Deposit PhP 3,000.00 0.00 PhP 3,000.00
Working Capital (3
months)
PhP
Supplies and Materials PhP 30, 075.00 PhP 117,000.00
147,075.00
Other Operational
PhP 7,650.00 0.00 PhP 7,650.00
Supplies
Salaries PhP 20,000.00 PhP 25,000.00 PhP 45,000.00
Rent PhP 3,000.00 0.00 PhP 3,000.00
Utilities PhP 4,500.00 0.00 PhP 4,500.00
PhP
TOTAL
207,225.00
Pre-Operating Expense PhP 15,000.00 0.00 PhP 15,000.00
PhP
Grand Total (Pesos) PhP 89,665.00 PhP157,000.00
246,665.00
Grand Total (%) 36.5% 63.5% 100%
Table 7
Loan Repayment Schedule
TOTAL
YEAR INTEREST PRINCIPAL BALANCE
AMORTIZATION
0 PhP157,000.00
PhP 180,550.00 PhP PhP157,000.00 0.00
1
23,550.00
2 0.00 0.00 0.00 0.00
3 0.00 0.00 0.00 0.00
**Interest at 15%
15
Table 8
Pumpkin Sorbet
PROJECTED INCOME STATEMENT
FOR THE YEARS ENDED 2008- 2010
2008 2009 2010

REVENUE PhP 979,440.00 PhP 1,175,328.00 PhP1,410,393.60
Cost /Expenses PhP 863,940.00 PhP 1,036,728.00 PhP1,244,073.60
Projected Net Income PhP 115,500.00 PhP 138,600.00 PhP166,320.00
Projected Income for the year is expected to by at least rise by 20%
Table 9
CASH FLOW 1ST QUARTER OF 2008
Projected Cash Flow Statement
Year
Particulars Pre- OP
1 2 3
Cash Inflow
-
Cash Equity -
PhP 89,665.00 -
Loan Proceeds - -
PhP157,000.00 PhP
Cash Sales PhP 979,440.00 PhP1,224,300.00
1,591,590.00
PhP PhP
Total Cash Inflow PhP 979,440.00 PhP1,224,300.00
246,665.00 1,591,590.00
Cash Outflow
Rental Deposit - - - -
Pre- Operating PhP 3,000.00 - - -
Expenses PhP 15,000.00 - - -
Purchase of F/A PhP 21,440.00 - - -
Assets - PhP 157,725.00 PhP 157,725.00 PhP 157,725.00
Selling Expenses - PhP 157,671.00 PhP 189,205.63
Tax Payable - - -
Loan Amortization - PhP157,000.00 - -
Principal - PhP 23,550.00 - -
Interest
Total Cash Outflow PhP 39,440.00 PhP 338,275.00 PhP 315,396.00 PhP 346,930.63
PhP PhP
Net Cash Inflow PhP 431,165.00 PhP 908,904.00
286,105.00 1,244,659.37
Add: Cash Balance, PhP
- PhP 286,105.00 PhP 717,270.00
Beg. 1,626,174.00
PhP PhP PhP
Cash Balance, Ending PhP 717,270.00
286,105.00 1,626,174.00 2,870,833.37
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II. Social Impact
A. Long- Term Desired Outcomes

Pumpkin Sorbet will supply the feeding program members in different
schools near the location including Alabang Elementary School, Cupang Elementary
School, Buli Elementary School and Sucat Elementary School. The proponents will
also prioritize the patient in the hospital. They are currently on negotiation with the
Principals of Cupang, Buli, and Alabang Elementary schools regarding the inclusion
of the pumpkin sorbet in the dietary supplement among the students in the school’s
feeding program. Thus, Pumpkin Sorbet expect that within three years of operation
it can fund its own feeding program and an advocacy program for squash growing
framers as part of their corporate social responsibility.
B. Social Impact in the Community

The business will not only help the malnourished children in the
community but to help the producers of these goods that will be the main thrust of
the business. It will implement an On-the-Job Training of the students inside the
Muntinlupa Business High School as a preparation for their official training in work.
The proponents of the business will also be the educator of the students taking the
T.V.E.( Technical Vocational Education)- Food Processing since our school is
implementing this hind of curriculum. This will be a great help for them in case they
are planning to build their own business in the future.
C. Business Impact in the Community

Pumpkin Sorbet believes in co- existing with nature and business
environment. It will increase market demand for pumpkin growers or squash
farmers who produce this agricultural product. This will help the government
prevent importation of pumpkins from neighbouring Asian agricultural countries.
Since the main product is made from pumpkin or squash, it promotes healthy,
affordable and satisfying pumpkin derivative products. The proponents made an
agreement with the MBHS administration on how they can be of help on the
promotion of nutrition and on increasing the agricultural market especially on
“Pagkaing Sapat Program”. The business has the potential to survive in the market
because of its affordability, high nutritional value and have high social desirability.
17
Here is a set of criteria which will guide you in evaluating the business
plan of your classmate.
RUBRICS FOR BUSINESS PLAN PAPER EVALUATION
Description Rubric Rating

10 8 6 4
Executive Summary
Personal Details
I. Names & Brief Biography
II. Name of Adviser/s & Brief Biography
Overview of the Business
I. Name of the Business
II. Description of the Business Model
III. Statement of Vision, Mission, and Values
Business Plan Proper
I. The Problem/Need
A. Description of the exact problem/need
addressed
B. Reasons/rationale why the problem/ need
must be addressed by the business
C. Descriptions on how the business has
solved the problem/need
II. Statement of Vision, Mission , and Values
A. Vision
Description/statement of what the proponent
sees if the problem/ need are solved.
B. Mission
Clear description of goals and objectives that
present practical steps to achieve the vision.
C. Clear statement of values critical to the
culture, integrity and activities of the business
III. The Marketing Plan
A. Research & Analysis
1. Description of the Target Market
2. Market Size
3. Competition/Market Share
4. Market Trends
B. Marketing Strategies
1. How the product/service be introduced
in the market?
2. How will the customers be reached and
served?
3. How will the investors be served?
4. Description of the business ownership,
roles of the partners.
5. Value Added Features
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6. Location of the business
IV. Production and Technical Plan
A. Detailed description of products/services
B. Operating Strategies
1. Description/Illustration of production
model
2. Detailed description of raw material,
suppliers, transportation needed and
how these will be accessed.
3. Details/data presented on how the
Products/services will be further
developed and the help needed and the
agency or company who can do it.
C. Critical Risks
a. Data on existing competitors
b. Statement on how the proposed business
is different from the others
c. Description/Illustration of the proposed
business' competitive strategy
d. Partners are identified, their roles, and
added value to maximize impact.
e. Detailed description of the risks and
opportunities (SWOT Analysis)
f. Description on how the business would
capitalize to prevent the risks.
V. Organizational/Management Plan
A. Members of the team
B. Team's contribution to the business
C. Others who can be part of the team
VI. Operational Plan
A. Detailed description on how the business will
be implemented.
a. Assignment of tasks
b. Schedules of deliverables
c. Data of necessary resources
d. Description/Illustration of operational
model and work flow
f. Description of business back progress and
division of works
g. Data on estimates of the business
operations
B. Monitoring and Evaluation
a. Statement of outcome the business will
achieve based on targets
b. Descriptions/Illustrations on how you will
monitor achievement
c. Statement of performance targets
d. Time line on when the targets will be
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achieved
Sustainability
I. Financial Plan
(This includes strategies for fund raising.)
A. Soundness of the average investment needed
B. Data/Scheduled of the specific investments
needed in 1 - 2 years
C. Percentage share on investments/capital of
each member of the proponents
D. Detailed description on how funds will be
raised to start the business
E. Data/Statement on how many years the
business will earn profit
II. Social Impact
A. Statement of the business' long-term desired
outcomes
B. Statement of the social impact generated from
each of the business activities
C. Statement/data on the benefit and impact of
the business to the community
20
ACTIVITY:
A. based on the given example of a business plan with its major
components, formulate one question per component to test if a
business plan meets a given standard using the rubric.
B. Now after you have formulated your questions, let it be

validated by your teacher which you may use in the evaluation
of your classmate’s business plan.
LET US REMEMBER
Business Plan is a blueprint to guide your business

policies, operation and strategies. It details the past, present
and forecasted performance of your business.
LET US APPLY WHAT YOU HAVE LEARNED
Being an entrepreneur, you must have an effective

business plan. You should follow the steps in preparing a
business so that the data must be accurate and adequate. This will
help you to choose the appropriate and effective strategies to ensure
success in your business venture.
ACTIVITY: Think of a simple business you want to engage in.

Make a sample business plan of that business using the
format below:
Business Name :
Location :
Name of Owner :
Introduction :
is a registered business engaged in

owned by .
Business goals are as follows:
a. The operation started on

b. The location could be reached by
c. The business could be expanded by
21
Table of Contents
Section I : The Business
1. Description of the Business

The business is engaged in the distribution of or production, or
of servicing customers.
2. Product/Service
The product/service is
3. Market
Production will be distributed in (mention primary and
secondary market) The clients belong to (description of the
socio-economic level). The product is bought by clients for the
following reasons:
4. Location of the Business

The business is located at
It can easily be reached by .
5. Competitors are as follows:
(State the name of the company and other relevant facts such as
size and possible sales)
A competitor’s profile includes price, quality, location, image

projected, strategies of selling and operations.
6. Price
The current price is _____. It is derived from the following
factors: (production cost and marked up costs) .
7. Marketing strategies
The product will be distributed in the following manner:
8. Management
The management group is composed of the following (name,
position, responsibility and qualification)
9. Personnel
The personnel needed are the following (enumerate the type of
work and their qualifications)
22
Summary of Section One
Section II: Financial Data
1. Sources and application of funding:

Secure financial assistance from
For the following purposes
Using the following collaterals
2. Capital Equipment List

The capital and equipment lists are the following:
Briefly describe the equipment and their uses. Include

processes employed in the production)
3. Balance Sheet
This is a statement of the financial condition of an enterprise at
a given point in time usually only a focus, quarterly, semi-
annually or annually. It shows the owner how money has been
invested and the accrued profit or losses.
4. Break-even Analysis
(It is a tool used by an entrepreneur in solving managerial
problems). It compares the total resources (TR) with the total
cost (TC)
TR represents income while TC represents expenses of the

enterprise. When TR is greater than TC, there is profit. But
when TR equals TC it is break even. There is no profit, nor loss.
5. Income Projection (Profit-Loss Statement)

a. Detailed by month(for the first year)
b. Detailed by quarter (for the 2nd, 3rd, 4th, 5th)
23
HOW MUCH HAVE YOU LEARNED?
POST TEST
Direction: Select the letter of the best answer and write it on

your quiz notebook.
1. Description of the target market is formed in the_________ part
of the business plan.
a. Marketing Plan
b. Marketing Strategies
c. Operating Strategies
d. Production Strategies
2. Detailed description of products or services is in what part of
the business plan?
a. Marketing plan
b. Production and technical plan
c. Operation plan
d. Organization and management
3. Which part of the business plan describes how the business has
solved the problems?
a. Statement of vision
b. The marketing plan
c. The problem need
d. Production technical plan
4. Which part of the business plan presents the data on how the
products/service will be further developed.
a. Financial Plan
b. Marketing Plan
c. Production Plan
d. Operation and technical Plan
5. What part of the business plan can present a clear statement of
values critical to culture, integrity and activities of the
business?
a. Marketing plan
b. Production plan
c. Operational plan
d. Statement of vision, mission and values
24
RESOURCES
- learning guide
- business plan
- assessment tool
REFERENCES
Adams, Bob, Small Business start – Up, Adams Media Corporation,

USA 1996
Peters, Hisrich, Entrepreneurship, MgGraw Hill Book Co. Singapore

1999
Rojo, Luz V. et.al Business Management, Adriana pubishing Co. INC.

Manila. 2003
Pumpkin Sorbet, Cabantog, Levy Jr., Rivamonte Gilvar, Bautista,

Jayvee, A Business Plan presented to the Board of Judges,
National Student Technologists and Entrepreneurs of the
Philippines, Business Planning Competition 2007, Davao City,
Philippines, November 21, 2007
25
KEY TO CORRECTION
1. A
2. B
3. C
4. D
5. D
26
ACKNOWLEDGMENT
Copyright Department of Education 2009
This module was based on the Writeshop on the Development of

the Competency-Based Curriculum (CBC) for Entrepreneurship for
Technical Vocational High School conducted at Marikina Hotel
Marikina City, May 25 – 30, 2009
This learning instrument was developed by the following personnel:
Dr. Reynaldo M. Valdez

Jones Rural School
Group Leader
Dr. Celedonia T. Teneza

Benigno Aquino High School
Mr. Gilbert Camayang

Cabrroguiz National School of Arts and Trade
Mr. Alfonso P. Rodriguez Jr.

Muntinlupa Business High School
Mr. Fernando C. Agustin

Bukig National Arts and Trade School
Mrs. Leona M. Tomas

San Pedro National High School
Writer/Facilitator:
Mr. Rene G. Delfino
Editor: Dr. Estrellita Evangelista
Encoder: Mrs. Marisol E. Saldivar
Funding: Department of Education
27
ACKNOWLEDGMENT

Marikina City, June 5 -7, 2009

Jones Rural School
Group Leader


Writer/Facilitator:
Mr. Rene G. Delfino

28
ACKNOWLEDGMENT

Marikina City, July 1to 5, 2009

Jones Rural School
Group Leader

Writer/Facilitator:
Mr. Rene G. Delfino

Editor: Carolina F. Chavez, Aida T. Galuran, Beatriz A. Adriano

& Dr. Corazon C. Echano
29
TABLE OF CONTENTS
Module Title: Finalizing Evaluated Business Plan Page
How to Use This Module . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Summary of Learning Outcome . . . . . . . . . . . . . . . . . . . . . . . . . 2
What Will You Learn

What Do You Already Know
Pre – Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lesson 1 : Finalizing Evaluated Business Plan. . . . . . . . . . . . . . . 4

What is this Lesson About
What Will You Learn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Let Us Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Activity
Let Us Remember
Let Us Apply What You Have Learned . . . . . . . . . . . . . . . . . . . . 6
 Post Test
How Much Have You Learned . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Post Test
Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Key to Correction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
30
HIGH SCHOOLS
Unit of Competency : Recall the Duties and Functions of

Enterprise Owner
Module Title : Recalling the Duties and Functions of

Module No. 2 Enterprise Owner
0
Welcome to the Module “Recalling the Duties and Functions
of Enterprise Owner”. This module contains instructional materials
and activities for you to complete.
The unit of competency “Recall the Duties and Functions of

Enterprise Owner contains the knowledge, skills and attitudes
required for the course Entrepreneurship.

assistance.
1
UNIT OF COMPETENCY : Recall the Duties and Functions

of Enterprise Owner
MODULE TITLE : Recalling the Duties and

Functions of an Enterprise
Owner

knowledge, skills and attitudes
required in recalling the duties
and functions of an enterprise
owner.
LO1 Recall the duties and functions of an enterprise

owner.
2
At the end of this module, you are expected to recall the

duties and functions of an enterprise owner.

PRE TEST
Let us find out how much you already know about
the duties and functions of an enterprise owner. Answer the
questions below honestly. Write the letter only of your chosen answer
in your activity notebook:
1. The management approach that supports the principle of

putting the right person in the right job is called___________.
a. behavioral approach
b. contingency approach
c. scientific management approach
d. systems approach
2. The diagram that shows the position of a person in the company

and the corresponding authorities, responsibilities and
accountabilities of such position is called a ___________.
a. accountability diagram
b. conduct job analysis
c. organizational diagram
d. status symbol
3. This is one of the steps in learning your personnel

requirements.
a. assess the strength and weaknesses of the present
employees
c. determine the workload in the company
d. all of the above
4. One way to meet extreme needs is through_________.

a. insurance plans
b. promotion
c. rest period
d. water to drink
5. A grievance system is a form of which type of communication?

a. Downward communication
b. Upward communication
c. Lateral communication
d. Horizontal communication
3
6. A leadership skill that refers to the ability to grasp the
relationship of different parts into an integrated whole and to
analyze data is called____________.
a. conceptual skill
b. human relations skill
c. technical skill
d. all of the above
7. This type of leader leaves his subordinates alone to establish

their goals and solve their problems.
a. autocratic leader
b. democratic leader
c. people – oriented leader
d. task – oriented leader
8. They represent the needs towards which all organizational

efforts are directed.
a. budget
b. objectives
c. policies
d. rules
9. In Maslow’s Model of Hierarchy of Needs, the level that refers to

the need to develop one’s potential and creation to the fullest is
called __________.
a. esteem needs
b. security
c. self – realization
d. social needs
10. The term that refers to the evaluation of the overall performance
of the firm is called______________.
a. employees evaluation
b. operational control
c. organizational control
d. qualify control
4
LESSON 1
DUTIES AND FUNCTIONS OF AN ENTERPRISE OWNER
WHAT IS THIS LESSON ALL ABOUT?
This lessons the recalls the duties and functions of

an enterprise owner.
At the end of this module you shall be able to:
1. Recall the duties and functions of an enterprise owner
LET US STUDY:
WORDS TO STUDY
Planning is thinking before a particular task is done.
Organizing means assembling the essential resources to

execute the developed plans.
Directing involves the guiding, leading and supervision of the

employees for the achievement of organizational
goals
Staffing is the proper and effective selection, appraisal and

development of personnel to do the jobs and fulfill
the roles in the structure.
Controlling means making sure that activities done in the

enterprise are in conformity with what has been
planned.
As you have previously learned, entrepreneurs plan and

organize resources and run the business. This denotes ownership of
the enterprise. Managers may or may not be necessarily the owners of
the company although they run it. They can be just mere employees.
The functions of management are uniquely described as

manager’s job. Managerial functions are the same for all organizations
5
regardless of size or type. The only difference is the amount of
emphasis given to each staffing, directing and controlling.
PLANNING
This is the function of management that involves setting of

objectives and determining the course of action for achieving these
objectives.
PLANNING
1. Environmental scanning
2. Establishing objectives
3. Identifying alternative courses of action
4. Evaluating various alternatives.
5. Making decisions about the best course
of action.
OPERATIONAL
(Intermediate – range)
(Short-range)
TACTICAL
STRATEGIC
(Long – range)
ORGANIZING
The task of organizing involves defining the specific activities

necessary to achieve the enterprise goals, clustering the activities into
departments or job positions and designating the personnel to head
and compose each department.
A diagram showing the organizational relationships of the

position and their corresponding authority, responsibility and
accountability is called the organizational chart.
Authority is the right that a manager has to require a

subordinate to accomplish something. Authority can be delegated.
Responsibility is the duty of the manager that one has to fulfill

in connection with the performance of his job. Responsibility cannot
be delegated.
Accountability, like responsibility cannot be delegated. This is
the situation of being answerable to higher authorities.
6
TYPES OF ORGANIZATION
 Line Organization
Direct command of superiors over workers who
accomplish the task. The officers of the operating units
receive orders from their higher authority and relay to
their subordinates.
Example:
MANAGER
SUPERVISOR
FOREMAN
WORKERS
 Line and Staff

The president hires to handle specialized activities which
a line officer can not handle the legal counsel helps and
advise the president and does not have authority over the
line employee.
PRESIDENT
LEGAL OFFICER
MARKETING PRODUCTION ADMINISTRATIVE

MANAGER OFFICER OFFICER
7
FUNCTIONAL TYPE
This structure focuses on the functions or types of

activities in each unit. It is expected that the worker has one or
more immediate supervisor
Example:
MANAGER
Supervisor
Leadman
QUALITY CONTROL PRODUCTION

OFFICER MANAGER
WORKERS WORKERS WORKERS
 Committee Type
This form of organization represents a group of persons

who may fulfill functional staff or line duties, as contrasted with
a one – man performer who runs the organization single –
handedly. An example is an executive committee which is
tasked to plan and formulate decisions in a company.
STAFFING
The organizational framework needs to be flashed out by people

who will man the positions.
8
FOUR ESSENTIAL STEPS
Design an
Improvement Plan
Examine Present Recruitment Training

Personnel and Development
Assessment of Workers’
Job Analysis
skills, strengths,
weaknesses, potentials
Workload
Assessment Workers vs. Required
Skills and Abilities
Quantity and
Quality of
Personnel Needed
DIRECTING
9
Directing involves putting your plans into effect.
BEHAVIORAL APPROACH
(Ex. Maslow’s Hierarchy of Needs)
MOTIVATION LEADERSHIP SKILL
upward
Communication lateral
downward
CONTROLLING
Making sure that what is done in the enterprise conforms with

what has been planned.
CHARACTERISTICS OF CONTROLLING
 Proper Activities
 Timely
 Cost – effective
 Accurate
Compare
Performance
Measure
Actual
Performance
Set
Performance
Measurement
ACTIVITY: Establish
Standard
10
Fill in the diagram with the five (5) basic functions of an
enterprise owner.
1.
2.
3.
4.
5.
ENTERPRISE OWNER
LET US REMEMBER
In a business enterprise, it is important to have an

organizational structure because it determines the level of
authority, duties and functions of each manager and worker.

Given your knowledge of the duties and functions of an
entrepreneur, put a check mark in YES if you are
appropriately doing your part as an entrepreneur. Put a cross mark X
In NO if you do not do your duties functions.
DUTIES AND FUNCTIONS YES NO

1. Planning
Do you have a clear plan on what is to be done, when, how
and by whom it should be done?
2. Organizing
Are your specific activities well defined?
3. Staffing
Do you have proper and effective selection, appraisal and
development of personnel to do the job?
4. Directing
Can you communicate well with your clients?
5. Controlling
Are you well aware of the quantity of your products or
services number of customers or clients and quality of
products or services?
11
HOW MUCH HAVE YOU LEARNED FROM THIS MODULE?
POST TEST
Multiple Choice:
Direction: Answer the questions below honestly. Write
the letter of the correct answer in your quiz notebook.
1. The management approach that supports the principle of

putting the right person in the right job is called.
e. behavioral approach
f. contingency approach
g. scientific management approach
h. systems approach
2. The diagram that shows the position of a person in the company

and the corresponding authorities responsibilities and
accountabilities of such position is called a ___________.
a. accountability diagram
c. organizational diagram
d. status symbol
3. This is one of the steps in learning your personnel

requirements.
a. Assess the strength and weaknesses of the present
employees
b. Conduct job analysis
c. Determine the workload in the company
d. All of the above
4. One way to meet extreme needs id through_________.

a. Insurance plans
b. Promotion
c. Rest period
d. Water to drink
5. A grievance system is a form of which type of communication?

a. downward
b. upward
c. lateral
d. horizontal
12
6. A leadership skill that refers to the ability to grasp the
relationship of different parts into an integrated whole and to
analyze data is called____________.
a. conceptual skill
b. human relation skill
c. technical skill
d. all of the above
7. This type of leader leaves his subordinates alone to establish

their goals and solve their problems.
a. autocratic leader
b. democratic leader
c. people – oriented leader
d. task – oriented leader
8. They represent the needs towards which all organizational

efforts are directed.
a. budget
b. objectives
c. policies
d. rules
9. In Maslow’s Model of Hierarchy of Needs, the level that refers to

the need to develop one’s potential and creation to the fullest is
called __________.
a. esteem needs
b. security
c. self – realization
d. social needs
10. The term that refers to the evaluation of the overall performance
Of the firm is called______________.
e. employees evaluation
f. operational control
g. organizational control
h. qualify control
13
RESOURCES:
- Assessment tools
- Learning guide
- Business planning
REFERENCES:
- Anderson, P. and Pulich “Managerial Competencies

Necessary in Today’s Dynamic Health Care
Environment. Heath Care Manager 21, no.2 (2002)
- Carrol, Stephen J., and Dennis J. Guillen. “Are the

Classical Management functions useful in
Describing managerial Work?”; Academy of
Management review 12 no.1 (1980:38-51)
- SEDP Book
- www.coolclips.com
14
KEY TO CORRECTION
1. C
2. C
3. D
4. D
5. B
15
ACKNOWLEDGMENT


Jones Rural School
Group Leader




Mrs. Leona M. Tomas

Writer/Facilitator:
Mr. Rene G. Delfino

16
ACKNOWLEDGMENT


Jones Rural School
Group Leader


Writer/Facilitator:
Mr. Rene G. Delfino
17
ACKNOWLEDGMENT


Jones Rural School
Group Leader

Writer/Facilitator:
Mr. Rene G. Delfino


18
TABLE OF CONTENTS
Module Title: Familiarizing Learners with the Page

Duties and Functions of Enterprise
Owner
What Will You Learn

Pre – Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lesson 1: Duties and Functions of an Enterprise

Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Let Us Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Activity
Let Us Remember
 Post Test

Post Test
Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
19
HIGH SCHOOLS
Unit of Competency : Perform Purchasing and Inventory of

Production Materials
Module Title : Performing Purchasing and Inventory of
Module No. 3 Production Materials
0
Welcome to the Module “: Performing Purchasing and Inventory of

Production Materials”. This module contains instructional materials and
activities for you to complete.
The unit of competency, Perform Purchasing and Inventory of

Production Materials contains the knowledge, skills and attitudes required
for the course Entrepreneurship.
You are required to go through a series of learning activities in order

to complete each of the learning outcomes of the module. Follow these
activities on your own and answer the Self-Check at the end of each learning
activity.

assistance.
1
UNIT OF COMPETENCY : Perform Purchasing and Inventory

of Production Materials
MODULE TITLE : Performing Purchasing and Inventory of

Production Materials
MODULE DESCRIPTION : This module covers the knowledge, skills

and attitude required to perform the
purchase of production materials.
At the end of this module, you are expected to:
L.O.1. identify criteria in purchasing production materials; and

L.O.2. utilize standard inventory control of the production materials.
2

 learn the criteria in purchasing production materials; and
 utilizing standard inventory control of the production
material.
Directions: Let us find out how much you already know in

identifying criteria in purchasing production materials and
utilizing standard inventory control of the production
materials. Answer the questions below honestly and write
the letter of the corresponding answer in your activity
notebook.
1. Apple, cucumber, carrots, tomatoes and corn are examples of what

products?
a. grown products
b. manufactured products
c. processed products
2. The dresses we have, bags we use and shoes we wear, are examples of
what products?
a. grown products
3. The maximized use of the natural resources, nurturing

entrepreneurial skills of the Filipino people and additional income of
the government through tax collection are examples of what
purchasing activity?
a. benefits of purchasing activity
b. factors in purchasing goods and services
c. guidelines in purchasing process
4. Assessing the profile of the producers and customers and checking

the track record of the suppliers are examples of what purchasing
activity?
5. These are stock files of materials for the inputs of production.

a. finished-goods-inventory
b. raw-materials-inventory
c. work-in-process inventory
3
6. These are partially completed products requiring further processing
including sets of unfinished goods for production process.
7. These are the final outputs of production ready for delivery to the
customers.
8. Stock card #1 has information and data that are categorized in what
cluster of items?
a. collective
b. group
c. individual
cluster of items?
a. collective
b. group
c. individual
10. When you need to purchase or avail of goods and services without the
need to leave the country, how do you classify these resources?
a. export resources
b. imported resources
c. local resources
4
LESSON 1
IDENTIFY CRITERIA IN PURCHASING

PRODUCTION MATERIALS
WHAT IS THE LESSON ABOUT?
This lesson will teach you how to identify criteria in the

purchase of production materials. It will guide you on how to
utilize a stock card for inventory control of production materials necessary
in the continuous operation of the business.
At the end of the lesson, you are expected to:

1. learn the benefits and factors in purchasing goods
and services by using the set of criteria cited in this
lesson;
2. use a stock card for the inventory control of the
production materials; and
3. identify local sources necessary in the purchase of
production of materials.
LET US STUDY
WORDS TO STUDY
Sourcing is a complete process of obtaining goods and services from
preparation and processing of a requisition to receipt and
approval of the invoice for payment.
Services are intangible products that are not goods (tangible products),
such as accounting, banking, cleaning, consultancy, education,
insurance, know how, medical treatment, transportation.
Stockpile is a comparatively large stock of essential goods or materials,
built up to withstand long holdups or scarcity due to natural
calamities, strikes, or war.
Inventory is an itemized catalog or list of tangible goods or property, or
the intangible attributes or qualities.
5
PURCHASING OF GOODS AND SERVICES FROM
THE LOCAL SOURCES
We are very lucky nowadays enjoying and benefiting from the

advantages that technology brings to our life. When we go to the
supermarkets and department stores, lots of goods and services are there
available for your needs. With various shopping malls we have in the entire
Philippines, you will not think of going abroad to purchase the things that
you want.
As an entrepreneur, you must realize that there are things that are
grown like the fruits, plants, vegetables and other natural resources. Other
things made and manufactured according to the needs and wants of our
target market or customers. Likewise, the services are also made and
created according to the felt need of the community. Service is more delicate
to manage because it is a work that someone has to provide to others with
satisfaction.
Why do you prefer to purchase from local sources? Purchasing local

goods and services is patronizing our own products resulting to some of the
following benefits:
 it stops the value of colonial mentality not only among young

children;
 it gives additional income to the government through tax
collection;
 it maximizes the use of our natural resources from raw
materials to the finished products;
 it develops the skills of the Filipino people making them more
innovative, creative and productive; and
 it gives affordable price for seasonal and quality products, fruits
and vegetables.
Factors do you consider when purchasing goods and services from the
local sources? Whether you sell PRODUCTS or sell SERVICES as part of
your business, skillful, careful and wise purchasing is an important part of
your business. It can determine whether or not you will make a profit. Here
are some important points to consider when purchasing goods and services:
 study the profile of the local producers
 research on the daily average consumption of the customers
 know your customers
 find out the right place to buy
 determine how much to procure
 check the track record of each supplier
 get the behavior of the patrons towards the products and services
 ensure the sustainability of the items
6
LET US REMEMBER
In the purchasing activity of the business, the supply of

goods and services are vital factors to consider. Supply is the
amount of something the customers can avail from the producers who make
or grow goods and services.
Directions: Find out the available goods and services in your

community and compare them with other communities using the Venn
diagram in any of the following categories:
1. Profile of the Producers 5. Determine How Much to Procure

2. Customer’s Average Consumption 6. Check the Track record
3. Profile of the Customers 7. Behavior of the Patrons
4. Right Place to Buy 8. Sustainability of the items
VENN DIAGRAM
DIFFERENCES DIFFERENCES
SIMILARITIES
7
HOW MUCH HAVE YOU LEARNED FROM THIS LESSON?
Directions: Write capital letter “B” for benefits and “F” for factors in
purchasing activity. Copy and answer this evaluation activity on your quiz
notebook.
CRITERIA IN PURCHASING MATERIALS RESPONSE
1. Knowing the customers you are prospecting
2. Having more tax collections
3. Checking the profile of the suppliers
4. Becoming more productive and creative
5. Maximizing the use of the resources
As a young entrepreneur, how can you show the responsible ways of

purchasing activities on any of the possible situations you may consider?
Write your answer on the blank sheets below.
1. ____________________________________________________________
_____________________________________________________________
2. _____________________________________________________________
_____________________________________________________________
3. _____________________________________________________________
_____________________________________________________________
4. _____________________________________________________________
_____________________________________________________________
5. _____________________________________________________________
_____________________________________________________________
8
LESSON 2
UTILIZE STANDARD INVENTORY CONTROL

OF THE PRODUCTION MATERIAL
This lesson deals with the inventory control of production

resources. You will learn some ways on how to do the controlling function of
a business to ensure enough resources in the making of goods and services.
At the end of the lesson you should be able to:
1. Determine the correct use of the business stock cards;

2. Conduct inventory control of the production materials for
the goods and services businesses using stock card.
LET US STUDY
WORDS TO STUDY
Control is an approach or strategy that checks and balance resources
needed in the continuous operation of the business.
Inventories are stocks of goods and materials available for
production or manufacturing.
Process refers to the step – by - step manner of operation making
product from raw materials into finished outputs.
Stocks are the inventory itself in various forms.
9
CONDUCTING INVENTORY CONTROL
OF GOODS AND SERVICES
One delicate task of an entrepreneur is to maintain an inventory

control of goods and services. There must be an assurance that the owner
will not run out of stock in the production phase of his business. These are
much accounted for from raw materials to the finished expected outputs.
All related activities of purchasing require control management. There must
be no shortages of materials since sources and supplies are locally checked
and available for the business.
How do you control inventory of goods and services? It is imperative to

determine your production ability, capacity and responsibility. An
enterprise must have reliable data about purchasing and manufacturing. A
production chart on daily, weekly, monthly, quarterly and yearly basis
would help to feed information as basis of parallel consumption of the
materials.
The use of stock card is a good strategy to control records of stocks of

goods and materials. There are three types of inventories described below:
1. Raw-Materials Inventory (RMI). These are stockpile of materials for

inputs of production. (Examples are textile in roll and threads in
boxes stocked in a warehouse for the garment industry.)
2. Work-In-Process Inventory (WIPI). These are partially completed

products requiring further processing including sets of unfinished
goods for production process. These unfinished items are for
fabrication or for further processing stocked in buffer storage.
(Examples are the baby dress garments with body parts only waiting
for the sleeve and collar sewing operations)
3. Finished-Goods Inventory. These are the final outputs of

production ready for delivery to the market or customers. (Examples
are bags, shoes, t-shirts, computers, calculators, books and others.)
To control is not only to check physically but to list down stocks and
balances on a stock card before deciding to do the purchasing activity. It is
important to declare the minimum and maximum stock of every item needed
in the business operation. The important sources like the suppliers and
stores (including business places) are reflected in the stock card including
the date of purchase and the price as reference.
10
In this stock card, it is important to update the daily record to tally
the actual stocks against what is reflected on the stock card. This would
help an entrepreneur to know what, when, where and how many items are
to be purchased at a time to sustain the inventory of goods and services.
Every stock card must be a reliable piece of reference. All items received
and used should be updated at all times.
Below are examples of stock cards that you may use. Of course, you
may also design your own stock card. The stock card-1 is for itemized
inventory record per item or individual; while stock card – 2 is for the
collective inventory record of all the files of stock card - 1.
TENEZA’S MEAT & FISH PRODUCT COMPANY

S TOCK C ARD- 1
(Individual/Per Item)
Stock Card No. Min. Stock Supplier:
Item: Max. Stock Re-Order Stock
+ Deliveries - Withdrawals BALANCE Withdrawn by:
Date (qty./units) (qty./units) (qty./units) (Person/Department)

S TOCK C ARD- 2
(Collective Items from Stock card – 1)
Operation Year: ________

Beginning +Total Deliveries Cumulative
Month Item Balance -Total Withdrawals Balance
11
Below is an example of a filled-up stock card,

S TOCK C ARD- 1
Stock Card No. 1 Min. Stock: 3 bags Supplier: MVC Company

Item: TVP/Textured Max. Stock: 25 bags Re-Order Stock: 20 bags
Vegetable Protein
+ Deliveries - BALANCE Withdrawn by:
Date (qty./units) Withdrawals (qty./units) (Person/Department)
(qty./units)
Balance Forwarded 20 bags Ms. Sol Saldivar
2009
May 25 5 bags 15 Mr. Rene Delfino
26 8 7 Jun (Mixing Section)
27 4 3 Reynaldo (Receiving Sec)
28 20 bags (OR#1221, P750/bag) 23 Leony (MVC Co.)
29 5 18 Perchy (DepEd)
June 2 16 2 Marian (Packaging Dept)
3 20 bags (OR#1221, P750/bag) 22 Leony (MVC CO.)
4 1 21 Jenny (Shipping Dept.)
10 2 19 Via (Manufacturing Dept)
13 1 14 Via (Manufacturing Dept)
16
17
18
19
20
LET US REMEMBER
In the successful inventory control management, always remember

to take note of the date, items received and withdrawn, supplier sources,
minimum and maximum stocks, re-order stock, the price and other data
important in the inventory control. The stock card should always be
maintained as a tool or basis to control inventory.
12
Directions: Following the Stock Card No. 1 (above) for

Textured Vegetable Protein of Teneza’s Meat & Fish Product Company,
assume business operation and consider your own business reflecting data
on the appropriate columns available. Copy the stock card on your activity
notebook and use it on your business now.
Name of your business: ________________________________________

S TOCK C ARD- 1
Stock Card No. Min. Stock: Supplier:
Item: Max. Stock: Re-Order Stock:
+ Deliveries - Withdrawals BALANCE Withdrawn by:
Date (qty./units) (qty./units) (qty./units) (Person/Department)
Balance Forwarded
HOW MUCH HAVE YOU LEARNED FROM THIS LESSON
Directions: Choose the correct answers from the ITEM

BANK below and write your answers on your quiz
notebook.
ITEM BANK
Finished-Goods Inventory Stock Card – 1
Inventory of Goods and Services Stock Card – 2
Inventory of Services Stock Card - 3
Raw-Materials Inventory Stock Card - 3
Work-In-Process Inventory Stock Card – 3
1. These are stockpile of materials for inputs of production.

market or customers.
4. This is the stock card for the collective items of stocks.
5. It is an inventory tool designed for individual item of stocks.
13
POST-TEST
Directions: Let us find out how much you already know about production
cost and pricing of products or services. Answer the questions below
honestly and write the letter of the corresponding answer in your activity
notebook.
1. Things or products like apple, cucumber, carrots, tomatoes and corn

are examples of what products?
a. grown products
2. The dresses we have, bags we use and shoes we wear, are examples of
what products?
a. grown products
3. Maximized use of the natural resources, nurturing entrepreneurial skills

of the Filipino people and additional income of the government through
tax collection are examples of what in purchasing activity?
4. Assessing the profile of the producers and customers and checking the
track record of the suppliers are examples of what in purchasing
activity?
5. These are stock files of materials for the inputs of production.


14
customers.
cluster of items?
a. collective
b. group
c. individual
cluster of items?
a. collective
b. group
c. individual
10. When you need to purchase or avail of goods and services without
the need to leave the country, how do you classify these resources?
a. export resources
b. imported resources
c. local resources
15
RESOURCES:
Individual Stock Card for Inventory Purpose

Stock Card for the Collective Items
REFERENCES:
Fajardo, Feliciano R., Entrepreneurship
Jorge A. Camposano, Jorge A., MBA, Ph.D., Entrepreneurship

for Modern Business
San Gabriel, Nati C., Business Finance and Business Firms
SEDP, Business Management
Teneza, Celedonia T., Ed.D., Worktext in Technology &

Livelihood Education in Business Management III, published by
Shekinah Publishing and Printing Press Co., Copyright, 2006
Teneza, Celedonia T., Ed.D., & Baes, Ma. Gradiva S., Worktext
in Technology & Livelihood Education in Business Management
IV, published by Shekinah Publishing and Printing Press Co.,
Copyright, 2006
Villanueva, Cristina R. & Rojo, Luz V., Technology & Livelihood

Education
Internet Sources:
www.wikipedia.com
www.econolib.org
www.brittanica.com
16
MODULE 3
Engaging in the Purchase of Goods and Services
PRE-TEST/POST-TEST
KEY TO CORRECTION
1. A
2. B
3. A
4. B
5. B
6. C
7. A
8. C
9. A
10. C
17
ACKNOWLEDGMENT
This module was based on the Writeshop on the Development of the

Competency-Based Curriculum (CBC) for Entrepreneurship for Technical
Vocational High School conducted at Marikina Hotel Marikina City, May 25
– 30, 2009
Jones Rural School

Group Leader



Mrs. Leona M. Tomas

Writer/Facilitator:
Mr. Rene G. Delfino

18
ACKNOWLEDGMENT

Vocational High School conducted at Marikina Hotel Marikina City, June 5 -
7, 2009
Jones Rural School

Group Leader

Writer/Facilitator:
Mr. Rene G. Delfino

19
ACKNOWLEDGMENT

Vocational High School conducted at Marikina Hotel Marikina City, July 1to
5, 2009
Jones Rural School

Group Leader
Writer/Facilitator:
Mr. Rene G. Delfino


20
TABLE OF CONTENTS
Module Title: Determining Production Cost Page

and Price of Products and Service
What Will You Learn

Pre – Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lesson 1: Identify Criteria in Purchasing

Production Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Let Us Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Let Us Remember
Lesson 2: Utilize Standard Inventory Control

of the Production Materials . . . . . . . . . . . . . . . . . . . . 9
Let Us Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Let Us Remember . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Let Us Apply What You Have Learned . . . . . . . . . . . . . . . . . . . . . 13
How Much Have You Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Post – Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
21
Republic of the Philippines Department of
Education
PUBLIC TECHNICAL –VOCATIONALHIGH

SCHOOLS
Unit of Competency : Determine Costing and Pricing of Products

and Services
Module Title : Determining Costing and Pricing of
Module No. 4 Products and Services
0
Welcome to the Module “Determining Costing and Pricing of

Products and Services”. This module contains instructional materials and
The unit of competency “Determine Costing and Pricing of Products

and Services” contains the knowledge, skills and attitudes required for the
course Entrepreneurship.
You are required to go through a series of learning activities in order

to complete each of the learning outcomes of the module. Follow these
activities on your own and answer the Self-Check at the end of each learning
activity.

assistance.
1
UNIT OF COMPETENCY : Determine Costing and Pricing of

Products and Services
MODULE TITLE : Determining Costing and Pricing of

Products and Services
MODULE DESCRIPTION : This module covers the knowledge,

skills and attitude required in
determining cost and price of products
or services of the business.
ESTIMATED DURATION : 10 Hours
L.O.1. estimate cost of products and services; and
L.O.2. determine pricing of products and services using

pricing model.
2
This module will teach you how to estimate cost of products and
services. You will learn how to determine price of products and services
using pricing model.
Directions: Let us find out how much you already know

about production cost and pricing of products or services.
Answer the questions below honestly and write the letter and
the corresponding answer in your activity notebook.
1. What is the business condition when the Total Revenue (TR) is greater
than Total Cost (TC)?
a. There is a business loss
b. There is a profit
c. There is no gain and no loss
2. In a laundry shop, when do you give a discount of 10%

a. 5 to 12 kilos of laundry
b. 10 to 13 kilos of laundry
c. 13 kilos of laundry and above
3. It refers to the value set for rendering a service or product for sale or
the amount paid for commodities.
a. cost
b. price
c. profit
4. How much is the price of a bottle of perfume when the cost is P250.00
with 38% Target Profit in Percent (TPP).
a. P299.00
b. P345.00
c. P380.00
5. A method of setting a price according to the values of the products or

services offered to the clients that usually increases when there are
evident results.
a. cost-plus-pricing method
b. return on investment pricing
c. value-based pricing
3
6. This describes a method of setting up price to target profit from
specific product or service.
7. Price is only one factor in purchasing which may lead to the most
risky activity in pricing. This is called _________________________.
a. highest price strategy
b. lowest price strategy
c. moderate price strategy
8. What type of costing is direct labor and raw material in production?

a. direct cost
b. indirect cost
c. purchasing cost
9. Expenses on building, machines, maintenance, salaries, office costs,

selling and financial costs are better known as overhead expenses.
Which of the following costing does it fall?
a. direct cost
b. indirect cost
c. purchasing cost
10. It refers to the margin or difference between the cost price and the
selling price of an item.
a. mark-up
b. revenues
c. sales profit
4
LESSON 1
ESTIMATE COST OF PRODUCTS AND SERVICES
This lesson will teach you how to estimate costs of products and
services. You will learn how to analyze and compute accurately for the
production cost of your own business venture.
At the end of the module you should be able to:
1. Apply the rules of production in your enterprise; and

2. Compute the cost and price of the product or service of your chosen
business.
LET US STUDY
WORDS TO STUDY
Capital Cost - a payment of interest for the duration of the loan
Cost - represents form of payment
Direct Cost - payment and expenditure made for the production or
service that become part of the product like acquisition
of raw materials and salaries/wages of the workers
Indirect Cost - sum of other expenses or cost generated from the
business and also known as overhead expenses
Material Cost - all materials needed both for direct manufacturing and
those needed for the functioning of the business
Production - process of making or manufacturing goods
Staff Cost - are salaries or wages plus additional costs as payments
or incentive on overtime works, social security, annual
and sick leaves of workers.
5
APPLYING THE RULES OF PRODUCTION
TO AN ENTERPRISE
The rules of production describe the behavior of the business

condition in the aspect of profit, loss, payment and production. Total Revenue
or TR represents income; while Total Cost or TC reveals expenses.
How will you know when to produce more? When to stop producing?
When to maintain production? Each situation below follows a decision.
Remember what to do in the following instances:
1. What will be your decision, when the TR (INCOME) of your

business is equal to TC (EXPENSES)?
EXAMPLE: TR = TC
2,000 = 2000
DECISION: There is a need to maintain your production.
2. What will you do when the TR of your enterprise is less than to

the TC?
EXAMPLE: TR = TC
5,000 = 8,000
DECISION: The production needs to stop.
3. What action do you need to take if you have greater TR than

your TC?
EXAMPLE: TR = TC
10,000 = 7,000
DECISION: You have to produce more
COMPUTING THE COST OF THE PRODUCT OR SERVICE OF

YOUR CHOSEN BUSINESS
The cost of the product or service is done on estimate approach. It is

vital to list down and determine the costing to make a product or to deliver a
service. It does not matter how big or small your business is. What is
important is to know and estimate the cost of your production or service
delivery. There are factors that cause successful industries to fail because
they are not aware of their costs.
6
What are the benefits if you know your costs? Look at the chart below
and find out how helpful it is to know the cost of your business:
PRODUCTION COSTS BENEFITS CHECKLIST

1 You can draft your estimates without worries.
2 You can anticipate for estimated profits.
3 You can identify the expensive and cheap materials you need.
4 You can have a chance to do the cost-cutting.
5 You can sense the improvements of your business.
Now that you know the importance of the production cost, how will
you compute for your costs? Here is how to do it:
1. List down your needed raw materials
2. Determine the other raw materials you need in the operation of
your business and services
3. Specify your estimate for the needed manpower
4. Come up with the facilities and machineries required in the
operation of your chosen business.
5. Survey on the quality but cheapest source of materials you need.
After completing your list, estimate for the DIRECT COST and
INDIRECT COST your business is facing. These are the two types of costs.
The direct cost refers to the item which becomes part of the products or
services composing material cost, wages and benefits. The indirect costs are
referring to those items needed in running a business and are better known
as overhead expenses. These are the expenses on building, machines,
maintenance, salaries, office costs, selling cost and financial cost.
DIRECT COST COMPUTATION

Description Estimated Cost
Monthly Wage and Allowance for 4 4 workers x P5,000.00 +
workers receiving Php5,000.00 & 1 1 supervisor x P10,000.00
Supervisor receiving Php10,000.00 =P30,000.00/monthly
Yearly Wage and Allowance for P30,000.00 x 12 months
4 workers and 1 supervisor =P360,000.00/yearly
Calculation for the Total Number of 47 weeks x 40 hours/week x 4
Hours spent by the workers in a year workers = 7,520 Hours
Hourly Labor Cost = Total Yearly P360, 000.00/7,520 Hrs.
Wage Bill/total number of hours =P47.87/Hour
worked in a year
Hours needed to complete a wood
bench (it takes only 2 workers, each 4.0 x 2
consuming 4.7 to do it): Labor time = 8 Hours
taken x no. of workers = total no. of
hours
Direct Labor Cost of the wood bench: 8.0 Hrs x P47.87/Hour
No. of Hours x Hourly labor rate = =P382.96
Total labor cost per wood bench =considered – P380.00
7
To compute for the direct material cost for one wood bench, include
the cost of all other materials and parts in manufacturing as shown in the
table below.
BILL of MATERIALS of 1 WOODEN BENCH
Total Board Price/ Unit Total Cost

Quantity Description
Feet (bdft) Bdft Cost
1 pc. 2”x2”x8’ (leg) 3 P29.00 P87.00 P87.00
4 pcs. 1”x3”x10’ (frame) 2.5 72.50 290.00
1 pc. 1.5”x2”x6’ (brace) 1.5 43.50 43.50
4 btls Plastic varnish 120.00 480.00
½ kl. 2” finishing nails 50.00 25.00
1 btl wood glue 65.0 65.00
4 pcs sand paper 15.00 60.00
1pc 2” paint brush 49.50 49.50
DIRECT MATERIAL COST PER BENCH P1,100.00
NAILING BOARD=1.2 ft.

SHORT FRAME=1.2 ft.
SEAT TOP BOARD=5 ft.
LONG FRAME=5 ft.

LEG=1.5ft
.
BRACE= 1.2 ft. LEG=1.5ft.
Can you compute now for the total direct costs of the bench? Get the
sum of the total direct labor, costs per wood bench, total direct material and
costs per wood bench. Analyze the computation below:
Total direct labor

Costs per wooden bench P380.00
Add: Total direct material
Costs per bench 1,100.00
TOTAL DIRECT COST PER BENCH P1,480.0
8
The entrepreneur has many other expenses compared to the direct
cost. The following is an example of how to estimate or compute for the
indirect cost:
A. INDIRECT COST COMPUTATION

Interest on loan P10,000.00
Insurance of machines/stocks 5,000.00
Maintenance of machines 20,000.00
Power and electricity 24,000.00
Rent of building 25,000.00
Salaries/Wages 60,000.00
Selling cost (transportation/representation) 20,000.00
Telephone 5,000.00
TOTAL INDIRECT COST+20 percent P169,000.00
of 169,000.00 for taxes, etc. + 33,800.00
TOTAL INDIRECT COSTS FOR THE YEAR P202,800.00
If one product is developed by an entrepreneur for the computation of

the indirect cost, the indirect cost is simply the indirect costs divided by the
calculated number of wood benches to be manufactured during the year.
Let us say that the entrepreneur targets for 1,500 wood benches:
P202,800.00 = P135.20
1,500
Computation for the total costs:

Total direct costs per bench P380.00
Add: Total indirect costs per bench 135.20
TOTAL COST PER BENCH P515.20
The entrepreneur’s computation of the wood bench is based on 1,500

sales units for a year. If there will be no increase in indirect costs, then the
indirect cost will be:
P772, 800 = P 515.20
1,500
The total cost of the bench now becomes:

Direct cost per bench P380.00
Add: Indirect cost per bench 515.20
TOTAL COST PER BENCH P895.20
9
LET US REMEMBER
The rules of production are helpful to the entrepreneurs. These will

guide him to know what and how to decide on his production. It tells when
they need to produce more, when to stop production or when to maintain
the production. Likewise, it is good for all the business enterprises to know
the computation of their production to avoid failure of business operations.
A. Given the following nominal values of revenues and

costs, decide whether you need to produce more, stop your production or
maintain production of goods or services. Draw an upward (↑) arrow if your
answer is to produce more; downward arrow (↓) when you need to stop and
draw a smiley face (☺) when your decision is to maintain production.
BUSINESS TR TC ENTREPRENEUR’S
NO.
NAME (INCOME) (EXPENSES) DECISION
1 Son’s Academy 18,000 21,000
2 Sea-Bricks Co. 24,500 19,000
3 Jay’s Fashion Shop 15,880 15,880
4 Jr/Sr Internet Café 6,800 8,300
5 Celjun’s Transpo 22,100 15,500
B. Compute for the cost and analyze the following problems. Write
your answers inside the box. Show the solution in a separate sheet
to arrive at the correct answers.
1. If you have two (2) workers receiving each a daily wage of P250.00 a
day, with 5 working days a week, how much is your total wage bill
for a month? ANSWER/SOLUTION: ______________________________
2. Based on your answer in number 1, how much is your annual wage

cost of production? ANSWER/SOLUTION: _________________________
3. How much will be your total direct costs per bench if the total direct
labor is P200.00 and the total direct material is 450?
ANSWER/SOLUTION: ____________________________________________
4. What is 25% of the assumed P150, 000.00 indirect costs?

ANSWER/SOLUTION: ____________________________________________
5. As an entrepreneur, what will you expect for a cost of a unit of wood

bench when you target for 2,000 unit yearly sales with P225, 000.00
total indirect costs for the year? ANSWER/SOLUTION:
___________________________________________________________________
10
Directions: Copy the letter of the correct answer on your quiz notebook.
1. This is the time when you need to decide to maintain your production.
a. When the TR is equal to TC
b. When the TR is greater than TC
c. When the TR is lesser than TC
2. It refers to the situation when you need to decide to produce more when
the _________.
a. TR is equal to TC
b. TR is greater than TC
c. TR is lesser than TC
3. Time may come when you really need to decide to stop your business
production. When the ___________.
a. TR is equal to TC
b. TR is greater than TC
c. TR is lesser than TC
4. It is the way you calculate or estimate the cost to have for a product.
a. costing
b. pricing
c. producing
5. The direct labor cost and direct raw material costs are under which
type of production cost?
a. direct cost
b. indirect cost
c. purchasing cost
A. Write on the worksheet below at least 5 particulars of the direct and

indirect costs of any service type or production business.
DIRECT COST INDIRECT COST

1. 1.
2. 2.
3. 3.
4. 4.
5. 5.
11
LESS0N 2
DETERMINE PRICING OF PRODUCTS AND
SERVICES USING PRICING MODEL
In this lesson, you will appreciate how to decide for the

market price of your products or services and choose your own pricing
strategy.
At the end of the module you should be able to:
1. Come up with a pattern of computation to price your own

products or services; and
2. Compute for the price of your own business products or
services.
LET US STUDY
WORDS TO STUDY
Mark-up represents the difference between what is paid for the
merchandise and its end price to the clients
Pattern refers to an outline or model of one thing
Price indicates value of a commodity or service in the form of money
Product the result of the input and process in the form of output
Services is a type of business that has no product but purely services
Strategy is an approach or method used in business
Pricing strategy is a part of the pricing system wherein the government

becomes alert against those who are abusing and making unreasonable
prices. Keeping an enterprise pattern when it comes to pricing of
commodities and services, serve as guide for the entrepreneurs to
understand how their prices are computed objectively. However, lowest
price approach is the most risky activity in pricing and it should be avoided.
12
The key secret of the business firms to compete for the price is
through the various pricing strategies. Giving focus on the competition for
cleanliness, convenience, delivery, easy credit options, guarantees, quality,
safety and service are only secondary concerns.
As a young entrepreneur, what is your idea about the different pricing

strategies? You may consider one of the following pricing strategies if you
still do not have your own strategy:
 Value-based pricing (price increases when there are evident results)
 Posting P9.95 instead of P10; P24.50 instead of P25.00; and others
 Value pack (mixture of clustered products with varied prices in one
pack or bag)
 Cost-plus-pricing method (setting up price targeting specific profit)
 High Price Approach aiming to set quality and status. It is also called
as prestige strategy
 Penetration market is common to the new entrepreneurs. They are
doing it in order to establish market and build up more customers.
 Free tasting (Sampling Approach)
 Result pay scheme (Trial Method)
Before you do the final pricing, you have to know the value of the
total revenues (TR) and the total costs (TC). When TR is greater than TC,
your business gained profit. If the TR is lesser than TC, it is loss. In
instances that the TR and TC are equal, there is neither profit nor loss. It is
called break-even. Break even analysis is used as an instrument or a tool to
solve managerial problems helpful among business leaders and economists.
Here are some models in pricing goods and services. These will help
you to know how you can compute prices of your own product and service
business. Find out if this pricing scheme is appropriate to use in the
production of your business:
1. Percentage Allocation Approach (PAA). This is good for product

business. Decide for the percentage value to be added to the actual
cost of your product or service. Below are examples:
A. Unit Cost of Product (UCP), TVE T-Shirt = P55.00

Target Profit in Percent (TPP) =40%
COMPUTATION = UCP + TPP
= P55.00 x .40 = P22.00
= P55.00 + P22.00
UNIT PRICE = P77.00
B. Volume Cost of Product (VCP), TVE T-Shirt by Volume Target
Profit (VTP) per dozen of Quantity (Q):
1 to 5 dozens = 38%
6 to 10 dozens = 35%
11 to 15 dozens = 32%
16 dozens & above = 30%
13
COMPUTATION for 1 to 5 dozens (maximum based) of TVE T-Shirts:
VCP = UCP + VTP x Quantity (Q)

= P55.00 + 38% x 60
= P55.00 + 20.90 x 60
= P75.90 x 60
VOLUME PRICE = P4, 554.00
UNIT PRICE = P75.90
COMPUTATION for 5 to 10 dozens (maximum based) of TVE T-Shirts:
VCP = UCP + VTP x Quantity (Q)

= P55.00 + 35% x 120
= P55.00 + 19.25 x 120
= P74.25 x 120
VOLUME PRICE = P8, 910.00
UNIT PRICE = P74.25
2. Average Mark-up Approach (AMA). This is appropriate to the service

type of business. Mark-up consists of damaged merchandise,
employee discounts, markdowns, operating expenses, profits and
shortages. This is common in industries but differ in the way they
execute it supported by company rules and policies.
Here is how to compute for the pricing of a service type of business.
a. Assume that you are operating a laundry service business

b. Decide for 60% profit against actual cost of every laundry service,
where 20% intends to support and finance some operating
expenses like damaged merchandise, employee discounts,
markdowns, operating expenses, profits and shortages.
c. Consider a 40% mark-up to be added to the cost of the service
Price of laundry service per kilo:
Cost of laundry = P20.00

General Markup = 60%
*40% Target Profit (TP); 20% Operating Expenses (OE)
PRICE = Cost of laundry + TP + OE

= P20.00 + 40% + 20%
= P20.00 + P8.00 + P4.00
= P32.00
When you compute for 5 to 10 kilos (maximum based) of laundry

service, rendered to a single client, you may charge her/him with a friendly
discount of 5% from the total charge. When you do it, it will not bring any
business loss to you but an investment of a good reputation and goodwill.
14
Let us find out how much you will sacrifice to invest for a possible
goodwill using the data above:
Unit price per laundry service P32.00 x 10 kilos -5% discount/10
= P32.00x10-5% /10
= P320.00-P16.00/10
= P30.40
Therefore, goodwill investment capital for 10 kilos of laundry service is

only P1.60 (P32.00 unit price less P30.40 discounted price) per kilo of
laundry service rendered to your customer.
It is suggested that the following goodwill investment package chart be

applied on your laundry business. You may also change it for further
improvement of your services:
a) 100% service fee of P32.00 per kilo of laundry

b) 5% discount from 5 to 12 kilos of laundry
c) 10% discount from 13 kilos and above of laundry
LET US REMEMBER
As a future entrepreneur, you have to value the importance

of honest and accurate computation in pricing. Pricing policy will
help every entrepreneur. The use of models or standard samples of
computation will facilitate the correct pricing procedure.
1. Assuming that you need to supply a school canteen of bottled mineral

water, 500 ml with a cost of P6.50/bottle, how do you determine the
price per bottle? Please explain your answer below by showing the
computation.
COMPUTATION:
15
2. If you will compute for the service of a doctor’s professional fee of
P380.00 per consultation (inclusive of the clinic rental, bills, etc.) how much
will the doctor’s consultation service be? Discuss your answer below by
showing the computation for 60% general mark-up.
COMPUTATION:
Directions: Copy the letter of the correct answer in your

quiz notebook.
1. If you have 10 jackets for P180.00 unit cost, how much will be the
unit price at 40% Target Profit in Percent (TPP)?
a. P272.00
b. P295.00
c. P252.00
2. Compute how much will be the price of a bottle of perfume when

the cost is P250.00 with 38%TPP?
a. P380.00
b. P299.00
c. P345.00
3. With 10% discount incentive, what will be the unit price of 10 kilos
laundry if the service is P32 per kilo?
a. P320.00
b. P232.00
c. P288.00
4. In a laundry shop, when do you give a discount of 10%

c. 14 to 15 kilos of laundry
5. What is the effect in business when the TR is lesser than the TC?
16
POST-TEST
Directions: Let us find out how much you have learned

about production cost and pricing of products or services.
Answer the questions below honestly and write the letter
and the word of your answer in your activity notebook.
1. What is the business condition when the TR is greater than TC?

2. In a laundry shop, when do you give a discount of 10%?

c. 13 kilos of laundry and above
3. It refers to the value sets for rendering a service or product for sale or
the amount paid for commodities.
a. cost
b. price
c. profit
4. How much is the price of a bottle of perfume when the cost

is P250.00 with 38%TPP.
a. P380.00
b. P299.00
c. P345.00
5. A method of setting a price according to the values of the products or

services offered to the clients that usually increases when there are
evident results.
6. This describes a method of setting up price to target specific

profit from specific product or service.
7. Price is only one factor in purchasing which may lead to the most risky
activity in pricing. This is called _________________.
a. highest price strategy
b. lowest price strategy
c. moderate price strategy
17
8. What type of costing is the direct labor cost and raw material in
production ?
a. direct cost
b. indirect cost
c. purchasing cost
9. Expenses on building, machines, maintenance, salaries, office costs,

selling cost and financial costs are better known as overhead
expenses. Which of the following costing does it fall?
a. direct cost
b. indirect cost
c. purchasing cost
10. It refers to the margin or difference between the cost price and the
selling price of an item.
a. mark-up
b. revenues
c. sales profit
18
RESOURCES:
Models in Pricing Goods and Services
Rules of Production Chart
Production Cost Benefits Checklist
REFERENCES:
Fajardo, Feliciano R., Entrepreneurship
Jorge A. Camposano, Jorge A., MBA, Ph.D., Entrepreneurship for

Modern Business
San Gabriel, Nati C., Business Finance and Business Firms
SEDP, Business Management
Teneza, Celedonia T., Ed.D., Worktext in Technology & Livelihood

Education in Business Management III, published by Shekinah
Publishing and Printing Press Co., Copyright, 2006
Teneza, Celedonia T., Ed.D., & Baes, Ma. Gradiva S., Worktext in
Technology & Livelihood Education in Business Management IV,
published by Shekinah Publishing and Printing Press Co., Copyright,
2006
Villanueva, Cristina R. & Rojo, Luz V., Technology & Livelihood

Education
Internet Sources:
www.wikipedia.com
www.econolib.org
www.brittanica.com
19
MODULE 4
Determining Production Cost and Price of Products and Services
PRE-TEST/POST-TEST
KEY TO CORRECTION
1. B
2. C
3. B
4. C
5. C
6. A
7. B
8. A
9. B
10. A
20
ACKNOWLEDGMENT

Vocational High School conducted at Marikina Hotel Marikina City, May 25 – 30,
2009
Jones Rural School

Group Leader
Mrs. Leona M. Tomas
Facilitator:
Mr.Rene Delfino
Editor:
Dr. Estrellita Evangelista
Encoder:
Mrs. Marisol E. Saldivar
21
ACKNOWLEDGMENT

Vocational High School conducted at Marikina Hotel Marikina City, June 5 -7,
2009
Jones Rural School

Group Leader

Facilitator:
Mr.Rene Delfino
Editor:
Dr. Estrellita Evangelista
Encoder:
Mrs. Marisol E. Saldivar
22
ACKNOWLEDGMENT

Vocational High School conducted at Marikina Hotel Marikina City, July 1to 5,
2009
Jones Rural School

Group Leader
Writer/Facilitator:
Mr. Rene G. Delfino

23
TABLE OF CONTENTS
Module Title: Determining Production Cost Page

and Price of Products and Service
What Will You Learn
Pre – Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lesson 1: Estimate Cost of Products and Services. . . . . . . . . . . . . .5

What is this Lesson About . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
What Will You Learn .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Let Us Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Let Us Remember
How Much Have You Learned . . . . . . . . . . . . . . . . . . . . . . . . . 10
Lesson 2: Determine Pricing of Products and Services

Using Pricing Model. . . . . . . . . . . . . . . . . . . . . . . . . .12
Let Us Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Let Us Remember . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Let Us Apply What You Have Learned . . . . . . . . . . . . . . . . . . . . . 15
How Much Have You Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Post – Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
24
HIGH SCHOOLS
Unit of Competency : Conduct Product or Service Trial Run

Module No. 5 Module Title : Conducting Product or Service Trial
Run
0
Welcome to the Module “Conducting Product or Service Trial
Run”. This module contains instructional materials and activities for
you to complete.
The unit of competency “Conduct Product or Service Trial

Run” contains the knowledge, skills and attitudes required for the
course Entrepreneurship.

order to complete the learning outcomes of the module. Follow these
activities on your own and answer the Self-Check at the end of each
learning activity.
assistance.
1
UNIT OF COMPETENCY : Conduct Product or

Service Trial Run
MODULE TITLE : Conducting Product or

Service Trial Run
MODULE DESCRIPTION : This module contains

information and suggested
learning activities on
conducting product or
service trial run.
SUMMARY OF LEARNING OUTCOME:
LO1. Conduct Product or Service Trial-Run
2
At the end of this module, you are expected to come up with

your own Business Trial Run Design (BUTRUD) and conduct a
product or a service trial-run for your business.
Think of the necessary ideas for a Business Trial Run

Design (BUTRUD) for the given products below based on the strategies
like price flexibility, advertisement and promotions, target market and
business locations. Write down appropriate ideas for these products.
PRE-TEST
Directions: Below is a Business Training Run Design for product and
service type of business. Choose at least one from the given matrix
and fill-up the needed information. Assume a business name of yours
and design for your BUTRUD up to Advertisement and Promotion
Scheme.
Business Trial Run Design

(BUTRUD)
PRODUCTS
PERFUME DETERGENT PARLOR
/SERVICES
Business Name
Business Owner
Business
Location
Target/Goals
Timetable
Price
Flexibility
Market/
Clients
Advertisement
& Promotions
Note: You may replace the given products of your interest.

Use a test notebook for this activity.
3
LESSON I
Conduct a Product or Service Trial Run
This lesson deals with the development of a Business

Trial Run Design (BUTRUD) based on the viability of the business you
may want to engage in. You will also learn how to use the BUTRUD
and run a trial for your own product or service.
At the end of this lesson, you are expected to:
1. Come up with your own Business Trial Run Design

(BUTRUD) suited for your business whether product or
service type; and
2. Use your own BUTRUD in preparation of the actual

selling of your business.
LET US STUDY
WORDS TO STUDY
Inputs are the materials needed for processing to come
up with finished products
Output means finished product
Process is the Step – by – step procedure followed in
transforming materials into finished products.
Production Plan involves the necessary raw materials and parts,
number of workers, types of machines needed,
and the completion time for such operation
involved.
Projected Sales are the expected results of variable cost and fixed
cost within the target period.
Sales Management involves formulation of sales strategy.
Trial – Run is the actual testing of a business.
Viability means the practicability of the business.
4
BUSINESS TRIAL RUN DESIGN (BUTRUD) FOR PRODUCT
and SERVICE TYPE OF BUSINESS
Before engaging into any actual business like selling a

product/s which you are to manufacture or produce, the essential
thing to do first is to design a Business Trial Run Design (BUTRUD).
This will serve you as a guide on how to decide from time to time to
come up with a better business management be it manufacturing or
rendering services.
Below are examples of a trial run matrix for a service type of

business which may help you in developing your own BUTRUD. You
may also adopt it if you feel the appropriateness in your business.
The trial run sample as follows is a service type of business

which is a jeep transportation routing from FTI via C5 to Guadalupe:
BUSINESS TRIAL RUN DESIGN (BUTRUD)

SERVICE TYPE OF BUSINESS
Business Name TENEZA’S TRANSPO COMPANY
Business
MAJ. JOVITO B. TENEZA SR.
Owner
Business BLK.4,LOT 25,PHASE 2,AFP/PNP VILLAGE, PHASE
Location 2, WESTERN BICUTAN, TAGUIG CITY
 To receive a flat rate minimum boundary of
P600 & P500 only for the 1st trial week run.
 To have a maximum boundary of P900 & P700
Target Goals
from the 2 units of jeeps after a week, except
(except coding)
weekends & holidays for P800 & P600 only.
 To save 10% from the daily boundary for
maintenance purposes after a week of trial
Timetable ONE WEEK ONLY
Price Flexibility  Minimum Fare - Php 7.00
(Fare Scheme)  Maximum Fare – Php 18.00
 All purposive trips through regular listing from
the jeep terminal (Housing or Guadalupe)
 Playing a beautiful sound.
Advertisement
 Could consider all rides under minimum fares
& Promotion
only for the 1st week of trip.
 After a week of advertisement, passengers will
be charged under normal fare matrix.
Target  Regular passengers/commuters (students,
Market workers, etc.) from any port of the FTI via C5
to Guadalupe.
 Rental from a group of people for the team
building of the school, company or students.
5
Having your trial run is a great advantage because this gives
you important information about the progress of your business in all
aspects of venturing.
Below is another BUTRUD for the product type of business.

Remember to give emphasis on the timetable of your trial before the
actual management of your venture.
Here is a sample trial run matrix of a product type of business

about ICE CREAM. This ice cream is a combination of the seasoned
fruits and vegetables. You may call it as a “Frut-Veg Ice Cream for All
Seasons”.
BUSINESS TRIAL RUN DESIGN (BUTRUD)

PRODUCT TYPE OF BUSINESS
Business Name FRUT-VEG ICE CREAM for ALL SEASONS

Business Owner DR. CELEDONIA T. TENEZA
Business LOT 10, BLK 136, LOPEZ JAENA ST.,
Location BRGY. RIZAL, MAKATI CITY
 To earn income of P3,000.00 in a week
 To double the income for the succeeding weeks
after the trial run
Target Goals
 To have an upward sales from week 1 onward
 To save at least 10% of the daily income for
revolving fund after the trial week
Timetable ONE WEEK ONLY
Price Flexibility  Minimum Price – Php12.00/cup size
 Maximum Price – Php 299.00/gallon
 Free for the 1st 5 buyers per cup size
Advertisement  50% discount for the next 5 buyers per cup size
& Promotion  25% discount for the 1st 5 buyers per gallon
 25% discount for the next 5 buyers per gallon
Target  Community neighborhood;
Market  Students in the nearby elementary, high
schools & universities;
 Buyers/walkers in the markets/supermarkets.
LET US REMEMBER
In venturing a business, it is important that the enterprise

owner is well versed with the Business Trial Run Design (BUTRUD).
This would help him to improve the business operations that may
result for better products or services. The BUTRUD serves as a tool to
check and balance the management of one business to ensure a good
income.
6
Try to arrange the words from the Item Bank and locate it
properly to the second column by writing the appropriate words that
describe the items/words in the first column.
ITEM BANK
Business Name Service type of business
Product type of business Price Flexibility
Business Location Advertisement/Promotion
Timetable Target Goals
Market/Clients Business Owner
Items on the first column of the chart below describe some part
of the structure of a Business Trial Run Design introduced to you in
this lesson. Analyze what is being described and write your answer on
the column opposite of each item.
1. Buy free for the 1st 5 clients
2. One week trial run
3. To save 10% from income after

a week of trial run
4. Students from elementary,

high school and universities
5. Frut-Veg Ice Cream

for All Seasons
7
POST-TEST
Directions: Below is a Business Training Run Design for

product and service type of business. Choose at least one from the
given matrix and fill-up the needed information. Assume a business
name of yours and design for your BUTRUD up to Advertisement and
Promotion Scheme.
Business Trial Run Design

(BUTRUD)
PRODUCTS
PERFUME DETERGENT PARLOR
/SERVICES
Business Name
Business Owner
Business
Location
Target/Goals
Timetable
Price
Flexibility
Market/
Clients
Advertisement
& Promotions
8
RESOURCES:
- pencil
- handouts
- writing materials
REFERENCES:
Almonte, Crispina B. et.al., Learning from Small Business, Anvil

Publishing Inc. 2007
Cuyugan, Jorge H., A Business Planning Manual
Ditablan, eustaquio, Feasibility Study Handbook
Mullins, John N., The New Business Road Test Prentice Hall., Great
Britain. 2003
Manu, George et. al., How to Elaorate One’s Own Business.

International Training Center of the ILO, 2005
Internet Source:
www.agripinoy.net/making
9
ACKNOWLEDGMENT


Jones Rural School
Group Leader




Mrs. Leona M. Tomas

Writer/Facilitator:
Mr. Rene G. Delfino

10
ACKNOWLEDGMENT


Jones Rural School
Group Leader


Writer/Facilitator:
Mr. Rene G. Delfino

11
ACKNOWLEDGMENT


Jones Rural School
Group Leader

Writer/Facilitator:
Mr. Rene G. Delfino


12
TABLE OF CONTENTS
Module Title: Conducting Product or Service

Trial Run Page
What Do You Already Know . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Pre–Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lesson 1: Conduct Product or Service Trial Run . . . . . . . . . . . . 4
What is this Lesson About . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Let Us Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Let Us Remember . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Post – Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
13
HIGH SCHOOLS
Unit of Competency : Perform Actual Selling of Products or

Services
Module Title : Performing Actual Selling of Products or
Module No. 6 Services
0
Welcome to the Module “Performing and Selling of Products or
Services”. This module contains training materials and activities for
you to complete.
The unit of competency “Perform Managerial Functions”

contains the knowledge, skills and attitudes required for the course
Entrepreneurship.

assistance.
1
UNIT OF COMPETENCY : Perform Actual Selling of

Products or Services
MODULE TITLE : Performing and Selling of

Products or Services
MODULE DESCRIPTION : This lesson deals with the actual

selling of products or services.
SUMMARY OF LEARNING OUTCOME
LO1 Perform actual selling of products or services.
2
At the end of this lesson you are expected to efficiently sell your
product or service.

PRE TEST
Let us find out how much have you already know
about actual selling of products or services. Complete the
statements below honestly. Write the words on the blank provided to
complete the statement. Choose the answer from inside the box.
Selling price
Personal selling selling terms
Selling techniques cold calling
____________________ 1. A seller’s attempt to persuade a buyer to make

a purchase.
____________________ 2. Last step in the chain of commerce where a
buyer exchanges cash for seller’s goods or
service.
____________________ 3. Market value or agreed exchange value that
will purchase a definite quantity weight or
other measure of goods or service.
_____________________4. Length of time a seller allows a buyer to pay
for the goods or services sold on credit.
____________________ 5. The process of approaching prospective
customers or clients who were not expecting
such an interaction.
___________________ 6. Body of methods used in the profession of
sales.
3
LESSON 2
ACTUAL SELLING OF PRODUCT OR SERVICE
This lesson deals with the actual selling and

application of sales management strategies to your
business.
At the end of this lesson you should be able to:
1. Do the actual selling of your enterprise be it a product or a

service.
2. Apply sales management strategies.
LET US STUDY
WORDS TO STUDY
Selling is the last step in the chain of commerce
where a buyer exchanges cash for a seller’s
goods or services.
Personal Selling is a seller’s attempt to persuade a buyer to

make a purchase.
Selling Terms is the length of time a seller allows a buyer to

pay for the goods or services sold on credit.
Price is the market value, or agreed exchange

value
that will purchase a definite quantity, weight
or other measure of goods or services.
Selling Techniques is the process of approaching prospective

customers or clients who were not expecting
such an interaction.
Most successful entrepreneurs believe that there are ideal

techniques in actual selling. However, based on the experiences of
successful entrepreneurs our module offers some selling strategies
4
which might be useful for your enterprise. A good seller is good in
asking questions to determine the customer’s needs and desires. This
knowledge will help you gain customers who will be willing to pay for
your product or service. On the other hand, you should be much more
knowledgeable about their product or service, then the prospects. You
must also offer valuable information and in sight to the decision
making process of your client.
SELLING STRATEGIES
1. Cold Calling - the process of approaching prospective

customers or clients who were not expecting such an
interaction.
2. Consultative Selling – emphasize customers’ needs and

meeting those needs with solutions combining products or
services.
3. Direct Selling – face to face presentation, demonstration and

sale of products or services, usually at the home or office of a
prospect by the independent direct seller.
4. Persuasive Selling – It calls for the ability of the seller to

persuade his buyer according to the compelling reasons why
the buyers need to buy your enterprise.
To gain success in selling, the following steps may be followed
SUCCESS
Build Long – Term Relationship
Closing
Handling Objections
Presentation
o Stimulus response
o Formula selling
o Canned
o Needs satisfaction
Prospecting
o Referrals
o Qualifying
SELLING
5
Steps You May Follow in Selling
1. Prospecting – You can get prospects from a number of sources.

oftentimes, referral from existing customers is the best way.
What you only need to do is ask. On the other hand, qualifying
prospects is an activity where you are trying to determine
whether you are likely to buy. The importance of this is based
on the premise that not all prospects meet the criteria to buy.
2. Sales Presentation – It is the time when you are presenting
your product or service to your customers with the objective to
stimulate further their interest. Oftentimes, this activity begins
with open - ended questions. It helps you discover what your
customers want and need. There are at least four types of
presentation. One is stimulus –response where you try to offer
the necessary information (stimulus) at the right time to make
your clients buy (response). Secondly, formula selling is more
thorough in providing your product information. The advantage
of this is that it reduces the risk of loosing important
information. Thirdly, canned presentation is presenting what
you have memorized or just doing it by reading. Finally, need
presentation involves asking questions and listening to
customers answers to identify their needs and desires.
3. Handling questions – Usually, prospects are objecting based on

costs, benefits or both. They also do it because they do not see
the necessity to buy. Others do the objection because they want
the deal to be more beneficial for them. In this step you need to
be patient and demonstrate interest in you clients’ need.
4. Closing – This is one of the important steps because in this

stage you will ask your clients orders and secure their
commitment to purchase. Oftentimes, you will be the one to
initiate the closing.
5. Build Long –Term Relationships – Let it not be said that the

closing is not the end of selling but the beginning of your long -
term relations with the customers. It involves follow - up sales
to see to it that they are satisfied with your enterprise. William
A. O’Connell came up with a conclusion in his research that
conducting the follow – ups is necessary to obtain repeat sales
from existing customers. It also costs about half the amount
needed to close a sale with a new customer.
6
ACTIVITY
Let us now consider the following steps in selling. This activity

aims to show your capability in actual selling by sharing your views
on given situations.
1. If your sari – sari store is in the slum area what selling strategy
would you employ? Explain why?
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
______________________________________________________________.
2. In your proposed Business,
a. List down at least five possible prospects where number one

is your major prospect and number five is your least prospect.
You may choose from the box below or you may write your own.
relatives church mates schoolmates
neighbors friends
1. __________________________
2. __________________________
3. __________________________
4. __________________________
5. __________________________
b. Considering your list of prospects, explain why each one is in

their respective rank?
LET US REMEMBER
Selling is believed to be an art of persuasion. There are

suggested steps where you can go through to sell your product or
service successfully.
7
Using the knowledge and insights you have learned from this
lesson, do an ACTUAL SELLING of your product or service this week–
end (Saturday/Sunday). Prepare a report on the actual selling done
for presentation and submission. Use the table below as part of your
report.
No. of Prospects Who
No. of Prospects No. of Products Sold/
Purchased Your
Approached Service Secured
Products/Services
Below is a Reflection Chart which will determine whether you

will continue or not as an entrepreneur. Rank yourself accordingly
from scale of 1 to 5 where 1 has a value of 2 points, 2=4, 3=6, 4=8 and
5=10 points. If you get a total of 6 and above, then, you are a
promising entrepreneur.
Finally, state your reasons why you want to continue as an

entrepreneur or not. You may share your experience.
REFLECTION CHART OF THE WOULD-BE ENTREPRENEUR

1 2 3 4 5
1. I am a risk taker.
2. I can easily decide for others.
3. I easily get mad at problems.
4. I feel irritated if I failed to meet
my expectations.
5. I am glad to meet people.
( ) I want to continue to become a successful entrepreneur because
____________________________________________________________________.
( ) I do not want to continue as an entrepreneur because

____________________________________________________________________.
POST TEST
Referring to the given strategies in selling, which one would
you employ as best suited for your Business Plan? Why?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
8
RESOURCES:
Resources depend upon the project plan made by students

based on their business enterprise.
REFERENCES:
- Almonte, Crispina B. et.al. Learningfrom small business. Anvil

Publishing Inc. 2007
- Mullins, John W. The new Business Road Test, Prentice Hall,
Great Britain 2003
- Manu, George et.al. How to Elaborate One’s Own business.
International Training Center of the ILO, 2005
- O’Connell, William A. “The Shapes of Things to Come” Sales and
Marketing Management, January 1990 pp 36 - 41
- www.agripinoy.net/making-hollow-blocks-from-farmwaste.html
9
Module 6
Perform Actual Selling of Products or Services
KEY TO CORRECTION
PRE-TEST/POST-TEST
1. Personal Selling
2. Selling
3. Price
4. Selling terms
5. Cold Calling
6. Selling Techniques
10
ACKNOWLEDGMENT


Jones Rural School
Group Leader




Mrs. Leona M. Tomas

Writer/Facilitator:
Mr. Rene G. Delfino

11
ACKNOWLEDGMENT


Jones Rural School
Group Leader


Writer/Facilitator:
Mr. Rene G. Delfino

12
ACKNOWLEDGMENT


Jones Rural School
Group Leader

Writer/Facilitator:
Mr. Rene G. Delfino


13
TABLE OF CONTENTS
Module Title: Performing Actual Selling of Products Page

Or Services
How to use this module . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
What Will You Learn

Pre – Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lesson 1: Actual Selling of Products or Service . . . . . . . . . . . . . 4

Let Us Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7

 Selling strategies
 Steps You May Follow in Selling
Let Us Remember . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
 Post Test
Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14
HIGH SCHOOLS
Unit of Competency : Prepare and Maintain Financial Records

and Reports
Module Title : Preparing and Maintaining Financial

Module No. 7 Records and Reports
0
Welcome to the Module “Preparing and Maintaining Financial
Records and Reports”. This module contains training materials and
The unit of competency “Prepare and Maintain Financial
Record and Reports” contains the knowledge, skills and attitudes
required for the course Entrepreneurship.
If you have questions, don‟t hesitate to ask your teacher for
assistance.
1
UNIT OF COMPETENCY : Prepare and Maintain Financial

Records and Reports
MODULE TITLE : Preparing and Maintaining

Financial Records and Reports

knowledge, skills and attitude
required in preparing and
maintaining financial records and
reports.
SUMMARY OF LEARNING OUTCOME:
LO1. Prepare and maintain financial records and

reports.
2
1. Differentiate accounting from bookkeeping.

2. Appreciate the importance of record keeping to the
business.
3. Understand the rules of debit and credit.
4. Prepare financial statement of the business.

PRE - TEST
A. MULTIPLE CHOICE:
Direction: Answer the questions honestly. Write the letter of
your choice in your quiz notebook.
1. It is known as the language of business.

a. Accounting
b. Bookkeeping
c. Transaction
d. Posting
2. It refers to recording business and event in a systematic

and chronological manner.
a. Bookkeeping
b. Accounting
c. Transaction
d. Liability
3. It is written on the left side of an account journal

a. debit
b. credit
c. profit
d. sales
4. It refers to the financial position of the business that

shows the assets, liabilities, and owners‟ equity.
a. financial statement
b. balance sheet
c. income statement
d. jounalization
5. It is a report that summarizes the revenue items,

expenses and profit/loss for the period.
a. expense
b. deprecation
c. income statement
d. balance sheet
3
6. It refers to the things of value owned by a business.
a. capital
b. inventory
c. cash
d. asset
7. It is the amount of merchandise sold and valued at selling

price.
a. sales
b. receivables
c. purchase
d. proprietorship
8. It refers to the amount to be collected or received from a

debtor in the future or at a later date.
a. receivables
b. net profit
c. gross profit
d. expenses
9. It consists of cash and other assets, that in the normal

operations are expected to be converted into cash.
a. fixed assets
b. current assets
c. other assets
d. all of the above
10. It is the expense balance computed from the analysis of

cash payment and comparative balance sheet data.
a. Depreciation
b. Expenses items
c. Revenue items
d. All of the above
4
LESSON 1
Prepare and Maintain Financial Records and Reports

An entrepreneur‟s growing concern is to continuously
learn and understand the activities of his or her business. The
cash movement, if properly recorded and kept, can clearly
describe the total business picture.
Bookkeeping can guide you in your tasks. The primary rule is to

understand the mechanics of financial records.

At the end of the lesson you should be able to:
1. Prepare and maintain financial records and reports.
LET US STUDY
WORDS TO STUDY
Assets are things of value owned by the business
Receivables are summarized accounts maintained with

debtors and creditors.
Capital is an excess of assets over liabilities
Balance Sheet is the formal statement of the financial position of

the business that shows the assets, liabilities and
owner‟s equity.
Income statement is a report that summarizes the revenue items,

expense and the difference between, which is
called net profit/loss for the period.
ACCOUNTING
 The language of business
 The art of recording, classifying, summarizing in a significant
manner and in terms of money, those transactions and events
which are part, at least of a financial character and interpreted
as the results thereof.
BOOKKEEPING
 The act of recording business and events in systematic and
chronological manner. The person involved in this task is the
bookkeeper. His main job is to record and process data in the
accounting system
5
Using the example on the below, let us illustrate the „Dual Aspect
Convention of Bookkeeping:
Let us assume that the material is Php.1,000.00 per kilo and

Php.50.00 per meter so that with these values, you can now sum up
in monetary terms that you bought goods amounting to Php.
13,850.00 (13 kilos X Php.1,000.00 plus 17 meters X Php 50.00.
It is clear therefore, that the common basis for every
bookkeeping record is the monetary value.
The “Dual Aspect” Convention

The convention is in fact at the very heart of a bookkeeping
system.
Bert brings a kilo of chicken to the market and in exchange he

buys T-shirt from Rene.
Each of the parties in the transaction „received‟ a certain

economic value and „gave‟ an identical value.
Bert „received‟ T-shirt and Rene „received‟ a kilo of

“Gave” a kilo of chicken chicken and “Gave” T-shirt
After the previous example let us assume that Bert buys a t-shirt from
Rene for Php.130.00. We can see here that although we are concerned
with a single commercial transaction (from Bert‟s point of view –
buying chicken for cash, from Rene‟s point of view – selling chicken for
cash.) We are still left with the „dual aspect.‟
Bert „received‟ goods (T-shirt) Rene „received‟ money and

and „Gave‟ money. „Gave‟ goods (T-shirt)
In other words, the language of bookkeeping tends to record a

single transaction in dual manner. One, what the person „received‟
and the second, what that same person „gave‟.
In bookkeeping, each
Debitsingle commercial
and Credit Rule transaction is
recorded twice. On the „received‟ side and then again on the „Gave‟
side. Debit is on the left side of an account journal.
Credit is the right side of an account journal.
6
Type of To Debit the Account To Credit the Account
Account
1. Personal When the person in When the person in whose
whose name the account name the account is kept
is kept is in debt to us. is in credit with us.
2. Real When the account When the account gives us
received money or money equivalent.
equivalent
3. Profit and Any account that ends Any account that ends
Loss with the words “Expense with the words „Revenue
Accounts” Account”.
COMPREHENSIVE EXAMPLE
1.1 We bought goods from GMC Grocery for an overall sum of
Php.100.00 (invoice no.123)
2.1 We sold part of the goods for Php.600.00 cash (receipt no.1950).
3.1 We paid Php.200.00 cash for electricity expenses (expense
voucher no.001)
4.1 We bought a stone from Rene for Php.20,000.00 (invoice no.953)
5.1 We rented the store out for Php.700.00 cash invoice no. 001
In the first part of the solution, the records will be presented in the form
of a “T Account” and they will be presented textually in the second part.
T Accounts
Good Accounts GMC Grocery

Debit Credit Debit Credit
(1) 1,000 600 (2) 1,000 (1)
Cash Accounts Electricity Expenses

(2) 600 200 (3) (3) 20
(5) 700
Stone Accounts Rene Accounts

(4) 20,000 20,000 (4)
7
Textual Records (Journal Entries)
Debit Credit
(1) Debit: Goods Account 1,000
Credit: GMC Grocery Account 1,000
1.1 Purchase on credit invoice 123
(2) Debit: Cash Account 600
Credit: Goods Account 600
2.1 Cash Sales Receipt invoice
no.123
(3) Debit: Electricity Expenses 200
Credit: Cash 200
3.1 Cash Payment, expense
voucher 001
(4) Debit: Stone Account 20,000
Credit: Rene Account 20,000
4.1 Purchase of Stone Account 953
(5) Debit: Cash 700
Credit: Income from Rental 700
5.1 Cash rental account
TOTAL: Php. 22,500 22,500
Event 1
 The goods account ( a real account) is debited. An

account was received (no.1 in the table)
 The GMC Grocery Account (a personal account) is
credited to receive money (No. 2 in the table)
Event 2
 The cash Account (a real Account) is debited – cash was

received. No.2 in the table
 The goods account (a real account) is credited – the store
issue goods (no. 2 in the table)
Event 3
 The electricity expenses (a profit and loss account) is

debited – every expense account is debited (no. 3 in the
table)
8
Event 4
 The store account (a real account) is debited. The

transaction received a monetary value (No. 2 in the
table).
 The Rene account (a personal account) is credited –
according to no.1 and 2.
Event 5
 The income from the mental account ( profit and loss

account) is credited – all receipts are a credit (No.3 in
the table)
 The cash account is debited – (No. 2 in the table)
 It is easy to remember that every expense account is debited

(the expense is a negative matter from an economic point of view
and it is a debt of the business).
 Similarly, all receipts are a credit (a credit is something positive
from an economic point of view and it is to the credit of the
business.
Journalizing Case Problem
CNSAT CATERING SERVICES

Gundaway, Cobarroquis, Quirino
Business Transaction
Date:
2008
August 1 Cash Investment amounting to- Php.10,000.00
Received Group Amounting to- Php.25,000.00
Investment Canteen – equipment- Php.15,000.00
Paid Permit and License Php.500.00
Purchase Merchandise
Php.25,000.00
And paid
Php150.00
Transportation only 90% of the amount purchased was
paid in cash
Purchased liquefied petroleum (LPG) for Php.350.00
9
August 2-6 : Sold cooked food and merchandise for
Php.30,000.00 only 95% was collected in cash.
August 7 : Purchased merchandise for Php.20, 000.00 in

cash and paid Php.100.00 for transportation.
August 8 – 15 : Sold merchandise for Php.25,000.00 in cash

offered snacks to visitors amounting to
Php.200.00 and recorded it as sales.
Collected Php.1500.00 of account receivables.
Paid account amounting to Php.2,000.00.
Paid salaries and wage manager/cashier and
sales ladies Php.8,000.00
An inventory merchandise amounted to
Php.13,000.00
August 16 - 30 : Purchase liquefied petroleum amounting to
Php.350.00.
Sold Merchandise for Php.50.000.00 only 95%
were collected in cash.
Purchase raw food and merchandise
Php.40,000.00 and paid Php.200.00
transportation. Only 0% of the amount
purchased were paid in cash.
August 31 : Received electric and water bills for the

month
amounting to Php.1,200.00
Sold cooked food and merchandise for
Php.10,500.00 in cash
Collected accounts receivables amounting to
Php.2,000.00.
Paid trade account amounting to
Php.3,500.00.
Paid salaries of manager/cashier and sales
lady Php8,000.00
Bought calculator Php.1,000.00 recorded as
canteen equipment.
Snacks offered to visitors was charged to
capital account.
Received building rental Php1,500.00
Depreciation of canteen equipment
Php.250.00 was recognized
Inventory of Merchandise and raw food
were value Php.19,345.
PREPARATION OF FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
 Balance Sheet
 Income Statement
10
 Statement of Cash Receipt and Disbursement
BALANCE SHEET ACCOUNTS
 Cash reported in the balance shows in your cash book,
with the total cash on hand and the bank deposits
 Receivables or payables – are summarized from the
accounts maintained with debtors and creditors.
 Merchandise and supplies inventory – are determined by
having physical count.
 Capital is simply the excess of assets over liabilities
 Assets – are things of value owned by a business
o Assets are normally classified as current, fixed and
other assets.
 Current assets – those consists of cash and

other assets that in normal operation one
expects to be converted into cash or
consumed during the normal operations.
 Fixed assets – are assets that are required
for long term use in the business.
 Other assets – those include patents,
goodwill etc., which do not come within the
above definitions
 Owner‟s equity – refers to the interest of up –
owner or proprietors in the assets of a
business.
INCOME STATEMENT
 Sales – the amount to be reported for sales consist of the total of

your cash sales on the account.
11
 Cost of Goods Sold – the inventory balance shown on in the
balance sheet is reported in the profit and loss statement and is
listed at the beginning of inventory.
 Expense Items – an expense balance computed from the

analysis of cash payment and comparative balance sheet data.
 Revenue items – a revenue balance computed from the analysis

of cash receipts ad comparative balance sheet.
 Depreciation – the charge for the depreciation account, to be

recognized in the profit and loss statement, required a special
analysis of balance sheets as well as cash data.
LET US REMEMBER:
 The law requires that some forms of records must

be kept by all businesses.
 In the time of keen competition, rising cost and
increasing taxes, there can be no alternative to
record keeping.
 There must be complete accounting of all
business transactions to efficiently handle
purchases and sales inventory control credit and
collection, depreciation and other expenses.
Activity 1
Direction: Classify the following as: A – assets, L – Liabilities,

C – Capital, R – Revenue, and E – Expenses.
12
Accounts Classification
1. G.M. Capital
2. Land
3. Cash
4. Building
5. Accounts receivables
6. Delivery truck
7. Service Income
8. Sales
9. Prepaid Insurance
10. Accounts Payable
Activity 2
Direction: Prepare a cash flow statement and income statement
of school canteen business for the period August 1-31, 2008. Refer to
the business transactions given below.
BISCUCHO SANTINO
Cash Flow Statement
For the Period _____________
August 1-15 August 16-31
CASH FLOW
Cash investment
Cash Grants
Cash Sales
Collection of Receivables
TOTAL CASH FLOWS
LESS: Cash Outflows
Cash Purchases
Freight in
Permit & License
Electricity
Wages
Salary
LPG fuel
Rental
Payment of Payables
TOTAL CASH OUTFLOWS
Net Cash Indlows (Outflows)
Add: Cash balance beg.
Cash Balance Ending
BISCUCHO SANTINO
Income Statement
For the Period _____________
Sales
13
Less Cost of Goods Sold
Raw Food and Merchandise Invent. (Beg.)
Add: Purchases
Transportation
Wages
LPG
Total
Less: Raw Food & Mdse. Invent. (End)
Cost of Goods Sold
Gross Profit
Less: Operating Expenses
Electricity/Water
Permit/License
Salary
Rental
Depreciation
Total Operating Expenses
Net Income for the Period
Add business forms and receipts
LET US APPLY WHAT YOU HAVE LEARNED:
14
It is always important to update and keep financial records and
reports. On your own perception express your point of view on the
importance of updating and maintaining financial records and reports
by completing the open sentences below:
1. If a business has clear and accurate financial records, I

____________________________________________________________
____________________________________________________________
___________________________________________________________.
2. Many successful business undertakings happened because

____________________________________________________________
____________________________________________________________
___________________________________________________________.
3. If I want to check and see how my business works, I usually

____________________________________________________________
____________________________________________________________
___________________________________________________________.
HOW MUCH HAVE YOU LEARNED FROM THIS MODULE?
POST TEST
B. MULTIPLE CHOICE:
Direction: Answer the questions honestly. Write the letter of
your choice in your notebook.
1. It is known as the language of business.

a. Accounting
b. Bookkeeping
c. Transaction
d. Posting
2. It refers to recording business and events in systematic

and chronological manner.
a. Bookkeeping
b. Accounting
c. Transaction
d. Liability
3. It is on the left side of an accounting journal.
a. debit
b. credit
c. profit
d. sales
15
4. It refers to the financial position of the business that
shows the assets, liabilities, and owner‟s equity.
a. financial statement
b. balance sheet
c. income statement
d. journalizing
5. It is a report that summarizes the revenue items,

expenses and profit/loss for the period.
a. expense
b. deprecation
c. income statement
d. balance sheet
6. It refers to the things of value owned by a business.

a. capital
b. inventory
c. cash
d. asset
7. It is the amount of merchandise sold and valued at selling

price.
a. sales
b. receivables
c. purchase
d. proprietorship
8. It refers to the amount to be collected or received from a

debtor in the future or at a later date.
a. receivables
b. net profit
c. gross profit
d. expenses
9. It consists of cash and other assets, that in the normal

operations are expected to be converted into cash.
a. fixed assets
b. current assets
c. other assets
d. all of the above
10. It is an expense balance computed from the analysis of

cash payment and comparative balance sheet data.
e. Depreciation
f. Expenses balance
g. Revenue balance
h. All of the above
16
RESOURCES:
- pencil
- calculator
- handouts
- writing materials
REFERENCES:
- Camposano, Jorge A. Entrepreneurship for Modern
Business Philippines, Copyright 2006
- Technology and Home Economics II SEDP Textbook First
Edition 1991
- Saguinsin,
Artemio T. Bookkeeping for beginners with Taxation Law,
Philippine Copyright 2006
- Feliciano Fajardo R. Entrepreneurship, Copyright 1994
- Pamphlets from DTI on Bookkeeping
17
ANSWER KEY
A. MULTIPLE CHOICE
1. A
2. A
3. A
4. B
5. C
6. D
7. A
8. A
9. B
10. B
B. CLASSIFICATION
1. C
2. A
3. A
4. A
5. A
6. A
7. C
8. A/E
9. E
10. L
18
ACKNOWLEDGMENT


Jones Rural School
Group Leader




Mrs. Leona M. Tomas

Writer/Facilitator:
Mr. Rene G. Delfino
19
ACKNOWLEDGMENT


Jones Rural School
Group Leader


Writer/Facilitator:
Mr. Rene G. Delfino

20
ACKNOWLEDGMENT


Jones Rural School
Group Leader

Writer/Facilitator:
Mr. Rene G. Delfino


21
TABLE OF CONTENTS
Module Title: Preparing and Maintaining Page

Financial Records and Reports
What Will You Learn

Pre – Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lesson 1 : Different types of Financial

Records and Reports . . . . . . . . . . . . . . . . . . . . . . . 5

Let Us Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Activity 1
Activity 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Let Us Remember

Post Test
Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
22
HIGH SCHOOLS
Unit of Competency : Monitor and Evaluate Business Operations

Module Title: Monitoring and Evaluating Business
Module No. 8 Operations
1
TABLE OF CONTENTS
Course Outline ......................................................................................1

Lesson 1 ................................................................................................2
Let Us Study .........................................................................................6
Information Sheet 1 ................................................................................7
Information Sheet 2 ..............................................................................10
Assignment 1 .......................................................................................13
Activity 2 ..............................................................................................17
Activity 3 ..............................................................................................19
Let Us Remember ................................................................................37
How Much Have You Learned ...............................................................38
Reference ............................................................................................41
Key to Correction .................................................................................42
2
Course ENTREPRENEURSHIP IV
Unit of
Competency Monitor and Evaluate Business
Operations
Module Title Monitoring and Evaluating Business
Operations
Welcome to the Module “Monitoring and Evaluating Business

Operations”. This module contains information, worksheets,
assignment and activity sheets for you to complete.
The unit of competency “Monitor and Evaluate Business
Operations” includes the knowledge, skills and attitudes required to
complete module.

order to complete the learning outcome of the module. Follow these
activities on your own and answer the Self-Check at the end of each
learning activity.
If you have questions, do not hesitate to ask your teacher for
assistance.
INTRODUCTION
This module contains information and suggested learning

activities used in assessing business operations.
In business operations, assessment is very important. It
consists of finance and accounting, internal auditing, buying of
materials, supplies, and equipment; facilities and risks management
and other activities needed to complete the cycle. As a student
entrepreneur, it is necessary that you are familiar with all the records
used in the operations such financial records and reports. You will
need this in gauging whether the business is earning or not.
This module consists of three learning outcomes, each learning
outcome contains learning activities with instruction sheets. Before
following the instructions, read the information sheets and answer the
self-check activities provided so that your teacher will be able to
assess your competence. He/she will check if you have acquired the
knowledge necessary to perform the skills portion of the particular
learning outcome.
Upon completing this module, report to your teacher for

assessment.
1
LESSON 1
MONITOR AND EVALUATE BUSINESS OPERATIONS
This lesson focuses on monitoring and evaluating business

operations. You will be guided on how to use tools and methods for
supervising/monitoring and evaluating business operations. When
you are already familiar with the tools and methods, the last part of
your lesson will be on reporting results of monitoring and evaluation
you conducted.
1. identify the different tools used in monitoring and evaluating

business operations;
2. apply methods in monitoring and evaluating business
operations;
3. prepare written and oral report based on the results of the
monitoring and evaluation conducted.
DIRECTION: To assess how much you learned from the previous

lesson try to answer the questions below. This will help you recall the
things you learned about business planning and preparing financial
records in business operations.
1. In any business, which of the following statements applies to

purchase and sales receipts?
a. Purchase receipts show what you have ordered from others
while sales receipts show the value of goods received from
others.
b. Purchase receipts show what you have purchased form others
and sales receipts show what others have purchased from you.
c. Purchase receipts show the items that others have purchased
from you and sales receipts show what you have purchased
from others.
2
d. Purchase receipts show what others have ordered from you and
sales receipts show the value of the goods you purchased from
others.
2. Which of the following statements best explains the most
important reason why businesses use checking accounts?
a. to gain tremendous prestige for entrepreneurs
b. to secure interest on the balance in the account
c. to provide a good record of payments
d. to enhance the quality of correspondence
3. Choose one of the following statements to indicate how the
inventory card is related to the purchase receipt and the sales
receipt.
a. Many of the purchase receipts would involve adding
inventory; sales receipts would be subtractions from
inventory.
b. Many of the purchase receipts would involve subtracting
from inventory; sales receipts would be additions to
inventory.
c. Both the purchase and sales receipts would involve adding to
inventory because they represent the same transaction.
d. Both the purchase and sales receipts would involve
subtracting from inventory because they represent the same
transaction.
4. The difference between the accounts receivable and accounts
payable cards can best be explained by which of the following
statements?
a. Accounts receivable show your cash sales, while accounts
payable show which customer owes you money.
b. Accounts receivable show your credit sales, while accounts
payable show which customer owes you money.
c. Accounts receivable show the customers who owe you
money, and the accounts payable show the vendors to whom
you owe money.
d. Accounts receivable show the vendors who owe you money,
and the accounts payable show the customers who owe you
money.
5. According to the cash method, what do you need to determine the
amount of profit for a particular period?
a. accounts receivable card and the check book deposits and
checks.
b. accounts payable card and inventory record.
c. deposits, revenue, checks written for expenses and service
charges.
d. inventory record and checkbook deposits.
6. One of the best ways to determine whether you have made a good
profit is to:
a. set a goal at the beginning of the year and compare your
profit to that goal.
3
b. compare your rate of return on the business to the return
which could be gained by using your resources in alternative
ways.
c. compare your profit to the 15% benchmark. If your return is
over that amount, you are doing well.
d. compare your return from your business against your
savings at a local bank.
7. Businesses that only sell services do not maintain inventory
records because:
a. tracking the movements of items would be necessary.
b. there is no goods to track
c. inventory records are time consuming for services.
d. only one inventory record is needed.
8. In a business, two items that you must withhold from their wages
or salaries are: (Choose two letters.)
a. Income Tax c. hospitalization
b. SSS or GSIS d. scholarship
9. Which of the following activities is the best example of a controlling
function of management?
a. deciding the amount/type of supplies to be ordered
b. telling employees about their specific responsibilities
c. putting in a time-clock for employees.
d. writing checks to make payments.
10. Prices are determined by:
a. cost of production and market demand
b. banks, as part of loan agreements
c. city regulations; laws and business
d. the Central Bank of the Philippines
11. Indicate an example of a typical fixed cost.
a. cost of supplies to make an item c. profit
b. rent d. mailing cost of items sold.
12. There are a number of factors to consider when relating to your
customers. Which of the following is it.
a. informing your customer of returns of your merchandise.
b. knowing your product/service
c. telling customers whatever it takes to make them feel good.
d. trying to provide all products that your customer may want.
13. Which of the following types of financial information would a
potential investor want to see in a business plan?
a. start-up cost c. break-even point
b. projected revenue d. all of the above
14. In SWOT analysis, there are forces such as inflation and
unemployment rates, which are to be considered as external
environment where opportunities and threats abound. Which one
is it?
a. economic forces c. political forces
b. societal forces d. technological forces
15. An essential analytical tool for business which compares the Total
Revenue and the Total cost is…
4
a. Break – Even Graph c. Break – Even Analysis
b. Break –Even Point d. Break – Even Point Sales Volume
5
Let Us Study
Words to Study
Accountability is the obligation of an individual, firm, or institution

account for its activities, accept responsibility for them and
to disclose the results in a transparent manner.
Accounting is a systematic process of identifying, recording,
measuring, classifying, verifying, summarizing, interpreting
and communicating financial information
Asset is something valuable that an enterprise owns, benefits from,
or has use of, in generating income. In accounting, an asset
is something an entity has acquired or purchased, and which
has money value (its cost, book value, market value, or
residual value
Budget is the estimate of costs, revenues, and resources over a
specified period, reflecting a management's reading of future
financial conditions. One of the most important
administrative tools, a budget serves also as a plan of action
for achieving quantified objectives, standard for measuring
performance, and device for coping with anticipated adverse
situations.
Business operations consists of handling money and recording day
to – day transactions, computations, buying of materials and
supplies, and checking of facilities
Equity is the right to an asset or property, held by a creditor or a
business owner.
Evaluation deals with measuring business operations variable based
on identified criteria.
Liability are the accounts and wages payable, accrued rent and
taxes, trade debt, and short and long-term loans. Owners'
equity also is termed a liability because it is an obligation of
the firm to its owners.
Procurement is a complete process of obtaining goods and services
from preparation and processing of a requisition to receipt
and approval of the invoice for payment.
Finance deals with matters related to money and the markets.
Monitoring is supervising activities in progress to ensure they are
on-course and on-schedule in meeting the objectives
performance targets.
6
I.
INFORMATION SHEET 1
II.
I. Supervising and Monitoring Business

Operations
A. Supervising and Monitoring
To ensure the successful operation of

the business you need to monitor. This
can be done through supervision.
Why? Proper supervision will enable you to
assess and support the production
performance, follow schedule and utilize
material and work force wisely.
To effectively and efficiently

monitor the business operations, the
student-enterprise owner needs to be
familiar with specific skills and
What?
techniques. You may seek advice from
your entrepreneurship teacher if you
think you lack the skills in doing the
task of monitoring and evaluating the
business you established.
Supervision is a very important

technique you need to use in assuring
the proper implementation of your
business plan. Here are some common
techniques:
a. direct observation
How? b. dialogue with worker
c. dialogue with customers
d. reviewing the market plan
e. reviewing the production plan
f. controlling supply
and logistics hands-on
7
Implementing
Supervision:
Prepare a simple supervision plan and supervision guide. A

simple yet adequate supervisory plan will help in assessing the
quality of activities performed by each member of your
enterprise.
Devise a Monitoring Curve and Control graph. This will ensure

that you closely monitor the different quality indicators set for
your product or services offered.
Create a checklist of the different qualitative information you

want to assess after a quarter or a year of your business
operation.
How to make a monitoring system:

1. Define the most important indicators with the help of an
indicator matrix which may include the following:
- process indicators selected for supervision
- indicator for achieving goals defined in your
Mission, Vision and Values Statement
- Indicators for the evaluation of results and
quality of the process
2. Define the components of the monitoring system based on
the list of indicators selected previously and using a
prioritization matrix with criteria such as: type of data
collection, frequency of analysis, type of data processing, and
responsibilities.
3. Define the standards for the indicators that you will use to
interpret results of monitoring.
8
B. Some Common Tools for Monitoring and Supervising Business
Operations
Used to:
Tools
Identify Describe Analyze
market share,
1. Bar Graph product
performance, sales, buying
comparing sales patterns
2. Benchmarking market
position market share
3. Checklist customer
preferences
Different
4. Program Matrix business Progress or Targets, goal
activities accomplishments attainment
quality of
7. Indicator Matrix product/serv product/service
ice performance
The table above presents some of the most common qualitative

tools in business monitoring and evaluation. These tools are used to
identify, describe, or analyze business situations. Depending on the
needs of your business you can choose any one or combination of
some of these tools in order for you to evaluate your business. The
main reason why you need to be familiarized with these tools is to
avoid problems, make your operate effectively, and efficiently.
9
INFORMATION SHEET 2
One way of presenting data you

gathered in the business operation is
through a bar graph. It will help you
to visualize the relationships among
different categories of factors
1. Bar Graph affecting your business such as
financial data, sales, projections and
trends. It is used when the
information corresponds to a nominal
scale, and when you want to compare
two or more groups.
Making a Bar Graph
If you are not familiar with using Microsoft Excel, you can follow
this simple steps to create a bar graph.
1. Draw vertical and

horizontal axes.
2. Create a scale on the

vertical axis to measure the
frequencies of the variable.
3. Note the nominal scale

(different qualities variable).
4. Draw a rectangle for each

quality of the variable.
Expected Production Per Month

Figure 1
90
80
70
60
50
40 Students
30 Faculty
Community
20
10
0
July
October
May
June
January
April
August
February
March
November
December
September
10
Example of a bar showing the expected production per month of
a student-based enterprise.
Activity 1
Create a bar graph using the data from a market survey on bread
preferences of students. If you are familiar with using Microsoft Excel
you may do so. If not follow the instruction in making a bar graph
from Information Sheet 1.
Types of Bread Percentage

Pandesal 28%
Cheese Monay 24%
Empanada 15%
Hopia 26%
Tasty Bread 7%
Create your Bar Graph here.
11
INFORMATION SHEET 3
Benchmarking is both a supervisory
and evaluation tool for business operation. It
is a technique which compares the
processes of one enterprise with those of
similar enterprises to study ways to improve
those processes.
Benchmarking is used for analyzing
2. Benchmarking strategies to improve the production
processes, selling strategies, promotional
and other operational strategies.
Steps in Benchmarking
Select another organization to use as a “benchmark”.
You identify an enterprise that provides similar product or services but
ideally not your competitor, or the leader in the industry who is willing to
share information with you.
Contact the identified “benchmarked” organization.

Explain the purpose of your proposed visit, gain their support and set a
date.
Make a site visit to collect data:

 Determine in advance the kind of information you want.
 Send a list of questions to your benchmark contact for them to prepare
for your visit.
 Agree on the agenda for the visit.
 Set appointment for the meeting and make an ocular inspection of the
benchmarked organization.
 Request for the future plans of the process or information you are
investigating.
 Be ready to share the comparable information of your own
organization.
12
Make a report of your findings, set a new goal and use the
results to propose improvements for your business.
Determine any important differences between the process

used by your organization and the process used by the
benchmarked organization.
13
ASSIGNMENT SHEET 1
BENCHMARKING
Instruction: Benchmark on a fish processing plant (homemade

sardines, patis, and other products) in your community and prepare a
report on packaging and production techniques they used.
Benchmarked Processes in:

Enterprise Production Packaging Labeling
Enterprise A
Enterprise B
Enterprise C
Analysis:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Things to be improved in my business
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
14
INFORMATION SHEET 4
Process indicator, or lists of closed-ended

questions are prepared based on the standards
set for the purpose. It is used to ensure that
different types of service or product providers
in your organization are coping or complying
3. Checklist/ with the identified standard of treatment
Check Sheet stated in the checklist form.
When you are trying to analyze a
problem, or when you are trying to find out if a
solution to a business operation problem was
implemented successfully, it is used as
consistency check of a process based on flow
chart, customer flow, production and workflow
in the business.
Steps in using Checklist

1. Review the steps of the process you want to observe.
2. Select the critical steps of the process.
3. Make a list of questions to check if the steps are performed.
These questions should be “closed” or answerable by “yes” or
“no”.
4. Perform the observation and collect data.
Here is a sample of a checklist…
CHECKLIST: CHOOSING A GEOGRAPHICAL LOCATION

The following checklist includes several questions you should answer before making your
ultimate decision on where to open your business. Be careful to factor in your own special
circumstances, which do not necessarily appear on this list.
Yes No
Is the area zoned for this type of business? __ __
Are qualified employees available in the area? __ __
Is the site close to the markets served by the business? __ __
Are there any competitors in the area? __ __
Are the inventory and supplies the business needs available in the area? __ __
Can suppliers conveniently make deliveries to this area? __ __
Is public transportation accessible? __ __
Are the utilities needed to run the business available? __ __
Are there facilities nearby for transporting goods? __ __
Are the rates for transporting goods similar to or lower than in other areas? __ __
Does the cost of this facility in this location compare favorably with other areas? __ __
Do the taxes on this facility compare favorably with other areas? __ __
Do the taxes on the business compare favorably to those in other areas? __ __
Is the area suitable for expansion in the future? __ __
Are there adequate parking facilities for customers? __ __
Are there adequate parking facilities for employees? __ __
Is the traffic in the area compatible with this type of business? __ __
Are the wage scales in thisASSIGNMENT
area similar to orSHEET
lower than
2 other areas? __ __
Is this a safe area for employees, suppliers, and clients? __ __
Source: http://smallbusiness.findlaw.com/source/forms/be4_4_1.doc
15
Instructions:
1. Prepare monitoring and evaluation checklist based on the
identified business operation variables. Give at least three (3)
items for each of the following.
 Asset
 Liability
 Equity
 Cash flow
 Income
 Production Plan
 Marketing Plan
 Sustainability
 Linkages
2. After you prepared the checklist, have it edited by your
classmate.
3. Trial-run your checklist.
4. Review the results of your trial run before finalizing the
checklist.
5. Submit to your teacher the finalized checklist.
Write your questionnaire in the box below
16
INFORMATION SHEET 5
Program Matrix presents the flow of

specific business activity of the
business at a glance. It spells out the
4. Program Matrix plan on how you will achieve
established objectives as stated in your
business plan.
Step in Using Program Matrix

1.Establish your objective or target you want to accomplish.
2. List down the different activities need to take place to meet
that objective.
3. Make a chart with the following headings:
4. Activities should specify the WHAT, HOW, and WHERE
Indicators should be the specific criteria for evaluation
purposes.
Goal should be an expression of quantity “how much” will be
and should be.
Resources spells out provisions needed to support the
Activities.
Time frame should be realistic based on the activities and
availability of resources
5. Fill out the chart, plan out the indicators, goals, resources,
personnel and the time frame that make up your overall
objective.
BREADWINNER Bake Shop

Program of Activities
First Quarter of 2009
Time-
Activities Indicators Goal Resources
frame
98% of raw
Purchasing June
materials needed
5 to
for one officer
Purchasing production cycle
June
15,
are made Increase 7% of Merchandiser 2009
available quarterly sales
Increase cash June
based on 2008
collections 16 to
Selling Reports August
15,
Sales personnel 2009
Sales reports are August
Reporting submitted and 16 to
Sales evaluated Accounting 18,
Clerk 2009
17
Activity 2
Instruction: Prepare a program matrix for your business for One-

Quarter
MY Enterprises
Program Matrix
2nd Quarter of 2009
Time-
Activities Indicators Goal Resources
frame
18
INFORMATION SHEET 6
An enterprise owner can use

an indicator to describe the
business operations in terms of
defined standards. It is developed
by collecting data and then
expressing it through quantitative
formulas or by means of graphs and
tables.
5. Indicator Matrix You can use an indicator to
diagnose a current situation, to
compare characteristics of target
markets or a process with other
factors or to evaluate the variations
of a business activity.
To construct an indicator you
need a matrix as a guide.
Preparing an Indicator
1. Identify the business variables you want to measure.

2. Describe the indicator in terms of proportions, time or
frequency, percentage or rate.
3. Create a formula for the indicator. An indicator is
composed of numerator (observable characteristics)
and a denominator (the reference point)
4. Find out the sources in obtaining data such as
financial records, daily reports, surveys, observations,
interviews, etc.. depending on the information you
want to translate into an indicator.
5. Identify the basis or standard of comparison.
Now, if the indicator has been prepared, you can now create an
indicator matrix like the table below.
Description
What to Source of Source of Quality
of an Formula
measure? Numerator Denominator Standard
indicator
19
ACTIVITY 3
Prepare your own Indicator using the table below. See instructions
below.
Description
What to Source of Source of Quality
of an Formula
measure? Numerator Denominator Standard
indicator
On the table above:

1. Write the questions on what you want to assess in your
business operation.
2. Write the description of the indicator in the second column.
3. Write the formula on the third column.
4. Indicate on the fourth column the sources where the data
can be obtained.
5. The standard of comparison should be written on the sixth
column.
20
II. Evaluating
Business
INFORMATION SHEET 7 Operations
 Assessment of business operations involves not only the

qualitative description of how it operates. Equally
important is your mastery of the quantitative approaches
in monitoring and evaluating business operation for more
objective treatment of some variables so that you can
easily grasp the viability of your business activities
 In module 7, you were given information about
preparation and maintaining business records. Your
familiarity with that information is very important in
quantitative monitoring and evaluation of business
operations.
 Successful entrepreneurs are noted for being keen with
numbers or figures in business. No business can grow
over long term without an accurate financial recording or
accounting system. It is essential in forecasting and
projecting results for improvement.
 Financial statement analysis involves careful selection of
data from financial statements for the primary purpose of
forecasting the financial health of your enterprise. This is
accomplished by examining trends in key financial data,
comparing financial data across companies, and
analyzing key financial ratios.
 Conclusions based on this ratio analysis must be
regarded as tentative. Ratios should not be viewed as an
end, but rather they should be viewed as a starting point,
as indicators of what to pursue deeper in your business
operation. In addition to ratios, other sources of data
should be analyzed in order to make judgments about the
future of an organization. You should also look, for
example, at industry trends, technological changes,
changes in consumer tastes, changes in broad economic
factors, and changes within the firm itself.
 Now you will be familiarized with the financial analysis of
your business. Go over with the information sheet
provided in the succeeding pages. Perform all the
computation required as diligently as you can. You will
find it handy as you mastered the different mathematical
presentations for each method.
21
INFORMATION SHEET 8
Useful Financial Ratios

Why?
Ratios are mathematical comparisons that can be used to
provide a very effective indicator of the financial progress of a
company at any given time.
These ratios do not have to be difficult though this may
sound very technical on your part as a student, you will only be
needing a few of these ratios in your business. You are primarily
looking for trends.
To successfully manage your business, you need to be able to
understand and interpret these ratios.
Financial ratio is one of the most common methods in
interpreting analyzing financial statements.
Financial Ratio Analysis methods are:
a. Profitability Ratio
b. Liquidity Ratio
c. Efficiency Ratio
d. Financial Structure Ratio
In computing the financial ratio analysis, you need the
following accounting records:
1. Income Statement
2. Two-Column Balance Sheet
3. Projected Income Statement
4. Projected Balance Sheet
a. Analysis of Profitability
This type of ratio is composed of two types. One is the

profitability compared with sales which help to determine
how well each peso of sales generates profit. The second is
the profitability compared with assets which help to
determine how hard the assets are working to generate a
profit.
22
Gross Profit Margin(GPM). This ratio represents the
average „gross‟ profit generated by each peso of sales.
Gross profit Margin = (Gross profit / Net sales) × 100
The formula reflects the relationship between the firm‟s pricing

policies (gross sales) and its buying policies (cost of goods sold).
Applying this “The Gross Profit margin of Breadwinner Bakeshop in
2009 actual and 2010 projected financial statement,” the computation
following the formula, you can see that the firm is planning to
increase gross profit margin from 37.5% in 2009 to 40.0% in 2010.
This is due to Php2.00 increase in price at a time when the cost of
goods sold is expected to increase by only Php1.00 per unit.
Computations:
Breadwinner 2009 = (Php225,000/Php600,000) x 100 = 37.5% (fig 2 & 3)
Breadwinner 2010 =(Php500,000/1,250,000) x 100 = 40.0% (fig 4 & 5)
Note: A decline in gross profit margin should be viewed with concern

because it usually represents a reduction in price or an increase in
the cost of goods sold which is not being passed on to customers.
23
For purposes of computations of the financial ratio
analysis, use the prepared Income Statement (2009 &
2010) and Two-column Balance Sheet of the Breadwinner
Bakeshop on Figures 1 to 4
Figure 1
BREADWINNER BAKESHOP
Income Statement
For the Year Ending May 30, 2009
Sales 600,000
Cost of Goods Sold
Beginning Inventory 45,000
Purchases 392,500
Less: Ending Inventory 62,500
375,000
Gross Profit Margin (___) 225,000
Operating Expenses
Owner's Salary 18,000
Wages 73,500
Commissions on Sales 15,000
Advertising & Promotions 60,000
Telephone & Electricity 5,000

Bank Service Charges &
Interest 5,000
Insurance 2,500
Depreciation Expense 6,000

Miscellaneous Expense 10,000 195,000
Net Profit Before Tax 30,000
Income Tax 12,000
Net Profit After Tax 18,000
24
Figure 2
Projected Income Statement
For the Year 2010
Sales 1,250,000
Cost of Goods Sold
Purchases 812,500
Less: Ending Inventory 125,000 750,000
Operating Expenses
Wages 130,000
Interest 7,500
Insurance 2,500
Miscellaneous Expense 10,000 437,500
Income Tax 25,000
Net Profit After Tax 37,500
25
Balance Sheet
May 30, 2009
ASSET LIABILITIES
Current Asset: Current Liabilities
Accounts
Cash 6,500 Payable 59,500
Accrued
Accounts Receivable 50,000 Expenses 500 60,000
Inventory 62,500
Prepaid Expenses 1,000 120,000 Long-term Liabilities

Mortgage on Land
Fixed Assets: & Building 30,000
Land 13,000 Bank Loan 10,000 40,000
Buildings 25,000 TOTAL LIABILITIES 100,000
Equipment 60,000
(Less Accumulated Depreciation) (18,000) 80,000 OWNER'S EQUITY 100,000

Other Assets -
TOTAL LIABILTIES & OWNER'S
TOTAL ASSETS 200,000 EQUITY 200,000
Figure 4
Balance Sheet
May 30, 2010
ASSET LIABILITIES
Current
Asset: Current Liabilities
Cash - Accounts Payable 128,500
Accounts
Receivable 104,000 Accrued Expenses 500
Inventory 125,000 Bank Overdraft 21,000 150,000
Prepaid
Expenses 1,000 230,000 Long-term Liabilities
Fixed Assets: Mortgage on Land & Building 27,500
Land 13,000 Bank Loan 10,000 37,500
Buildings 25,000 TOTAL LIABILITIES 187,500
Equipment 44,500
(Less
Accumulated
Depreciation) (28,000) 82,500 OWNER'S EQUITY 125,000
Other Assets
TOTAL TOTAL LIABILITIES & OWNER'S
ASSETS 312,500 EQUITY 312,500
26
Net Profit Margin (NPM)
The ratio represents the average „net‟ profit earned by each peso
of sales. It reflects profitability after the operating costs of doing
business have been deducted from gross profit.
Net Profit Margin = (Net Profit before tax/Sales) x 100
Computations: Breadwinner 2009 and 2010
Net Profit Margin (2009) = (30,000/600,000) x 100 = 5%
Net Profit Margin (2010) = (62,500/1,250,000) x 100 = 5%
Think About…
“Why do you think, in-spite of the increase in Breadwinners
projected Net Income, the net profit margin has remained
unchanged?”
Return on Assets (ROA)

This analysis focuses on the earning performance of your
enterprise‟s assets. You will need to look into Income Statement in
the Balance Sheet to compute the ROA.
Return On Assets = (Net Profit before tax/Total Assets) x 100
Computations:
Return On Assets (2009) = (30,000/200,000) x 100 = 15% of
200,000
Return On Assets (2010) = (62,500/312,500) x 100 = 20% of

312,500
Data from Income Statement and Balance Sheet 2009 & 2010
The computed ROA shows that there is an increase from 15% to

20%. It means that the Breadwinner‟s rate of profit is increasing faster
than the asset base.
27
If there is a decrease in the ROA it means that the expenses rise
faster than the sales revenue. Thus, ROA should always be computed
and analyzed based on the gross and net profit margins. A decrease
can also occur if the asset base increases at a faster rate than the
profit.
Return on Owner’s Equity (ROE/ROI)

The earning power of the owner‟s investment in the business is
measured in terms of ratio between the net profit before tax and the
owners‟ equity.
The Owner‟s Equity is equal the Net Assets (total assets minus
total liabilities). If there are no liabilities, then it is equal to return on
assets. This only happens if your business will not resort to borrowing
from loan companies. In most cases though, the owner‟s equity is
always less than 100% of the assets employed and the return on
owner‟s equity may be different from the return on assets.
Return On Owners’s Equity = (Net Profit before tax/OE) x 100
OE – Owner’s Equity
Computations:
Return On Owner‟s Equity (2009) = (30,000/100,000) x

100 = 30%
Return On Owner‟s Equity (2010) = (62,500/125,000) x

100 = 50%
b. Liquidity Ratio
The enterprise ability to meet its financial obligation and

commitment is determined in a Liquidity Ratio. If your enterprise
cannot meet the obligations, then there is a need to take a closer look
on how you can shape-up your financial and cash flow budgeting.
Liquidity Ratio is expressed in terms of Current Ratio (CR) and Liquid
Ratio (LR). To compute for CR and LR you need information from the
end of the period and projected Balance Sheets.
Current Ratio. This is the relationship between the current assets

and he current liabilities.
Current Ratio = (Current Asset/Current Liabilities)
28
Computations:
Current Ratio (2009) = (120,000/60,000) x 100 = 2.0
Current Ratio (2010) = (230,000/150,000) x 100 = 1.5
Breadwinner‟s current ratio is projected to deteriorate in 2010
because the current liabilities are rising at a faster rate than the
current assets. It means that the bakeshop‟s ability to meet its
obligation in the coming years will also decrease. Loan companies and
banks consider this information seriously. If you are the owner of
Breadwinner Bakeshop, you need to consider this before applying for
loan.
The rule of thumb here says that a business should attempt to

maintain a current ratio of at least 2:1. However, this needs to be
interpreted according to individual circumstances of each business.
Liquid Ratio. One of the tools to assess the enterprise‟s capacity to

pay its obligations is liquidity. Many loan providers prefer to evaluate
the business ability to pay in terms of liquid ratio. This is the
difference between the current asset and the inventory divided by the
current liabilities.
Liquid Ratio= Current Asset – Inventory/Total Assets
Computations:
Liquid Ratio (2009) = (120,000-62,500/60,000) x 100 =
0.96
Liquid Ratio (2010) = (230,000 – 125,000/150,000) x

100 = 0.70
The rule - of - thumb in liquid ratio is 1:1. As you can see,

Breadwinner‟s liquid ratio is 0.96 : 0.70, which means that their
2010 ratio is slightly unfavorable. However, using the 1:1 basis should
also be interpreted with utmost care.
c. Efficiency Ratio
29
The efficient use of assets is measured by the frequency of their
turnover. When all the assets are efficiently used, the return on assets
is maximized.
Asset Turnover is the measure of how effectively the enterprise‟s

assets are working to generate sales..
Asset Turnover= Sales/Total Assets) x 100
Computations:
Asset Turnover (2009) = 600,000/200,000 = 3
Asset Turnover (2010) = 1,250,000 /312,500 = 4
Breadwinner‟s Asset Turnover forecast shows an improvement

in 2010 asset turnover from 3 to 4 times. This means that the asset
base will be working more efficiently to generate sales in 2010.
Many small enterprise owners adapt the use of accounts
receivable and inventory turnover in greater detail. These two current
assets are primarily important for computing efficiency and liquidity
ratios.
Accounts Receivable Turnover (ART) reflects promptness of the

business in collecting accounts receivables from customers. Ideally,
the faster accounts receivables are collected, the better.
Accounts Receivable Turnover = Sales/ART) x 100
ART - Accounts Receivable Turnover
Computations:
Accounts Receivable Turnover (2009) = 600,000/50,000 =
12 times
Accounts Receivable Turnover (2010) = 1,250,000/104,000 =

12 times
Based on the computations, the Breadwinner‟s ART is 12 times

both for 2009 and 2010. However, converting this ART into Average
Collection period gives clearer information on how fast the business
collects the Accounts Receivables from its debtors.
30
Average Collection Period = 360 days/ART)
ART - Accounts Receivable Turnover
Computations:
Average Collection Period (2009) = 360/12 times = 30
days
Average Collection Period (2010) = 360/12 times = 30

days
The Average Collection Period of Accounts Receivable of

Breadwinner is 30 days for both years. The significance of computing
the ACP is to compare the age of accounts receivables from one period
to another. If the average collection period is longer, it is often a
danger signal that the enterprise is becoming dependent on too many
slow payers. It also means that the enterprise is carrying some bad
debts that should be written off. If the ACP is much shorter than the
industry average, the firm might consider taking a few more credit risk
to expand or increase sales.
Inventory Turnover
This is the ratio which reflects how fast the inventory turns over or
sells during the year. The ideal is for you to aim at the highest rate of
inventory turnover without too many stocks outs and lost sales.
Inventory Turnover = Cost of Goods Sold/Inventory Ending
Computations:
Inventory Turnover (2009) = 375,000/62,500 = 6 times
Inventory Turnover (2010) = 750,000/125,000 = 6 times
Inventory Turnover of Breadwinner is 6 times from 2009 to

2010. It is just an average. This can be increased to stimulate sales.
d. Financial Structure Ratio
31
Financial Structure Ratio refers to the relationship between
the debt and equity of the business. This relationship determines who
really owns the business, the owner or the creditor.
Most of the successful entrepreneur started their business
without adequate capital. With great propensity in taking risk, they
resort on capital borrowing from banks and lending institution.
Engaging in capital or investment borrowing is a healthy practice in
business community. However, you have to take precautionary
measures before resorting to it. Familiarity with Financial Structure
ratio will help you decide if your enterprise can go on to borrowing
money. One way of looking at financial structure is to focus on the
proportion of the business represented by the owner‟s investment.
This is the ownership ratio.
The ownership ratio reflects the proportion of the total assets,

which are represented by the owner‟s funds. The difference represents
the part of the firm‟s assets funded by its creditors.
Ownership Ratio = (Owner’s Equity/Total Asset) x 100
Computations:
Ownership Ratio (2009) = 100,000/200,000 = 50%
Ownership Ratio (2010) = 125,000/312,000 = 40%
Breadwinner Bakeshop‟s balance sheet and income statement

shows that the ownership ratio in 2009 is 50%. This means that half
of the bakeshop‟s investments come from its creditors. While in 2010,
the owner has only 40% funds in the business. So the greater portion
of the investment is now with the creditors which own 60% of the
enterprise.
WORKSHEET 1
ArteCulante ENTERPRISES
Income Statement
For the Year Ending May 30, 2009
Sales 300,000
Cost of Goods Sold
32
Purchases 196,250
Less: Ending Inventory 31,250 ___________
Operating Expenses
Wages 36,750
Interest 2,500
Insurance 1,250
Miscellaneous Expense 5,000 ________
Income Tax 12,000
Net Profit After Tax _________
Your Task: Based on the above Income Statement of ArteCulante

Enterprises for the Year Ending December 30, 2008, compute for:
a. Cost of Goods Sold

b. Total Operating Expenses
c. Net Profit After Tax
d. Gross Profit Margin
WORKSHEET 2
Projected Income Statement
For the Year 2010
Sales 625,000
Cost of Goods Sold
Purchases 406,250
Less: Ending Inventory 62,500 ________
Gross Profit Margin (___) ________
Operating Expenses
33
Wages 65,000
Interest 3,750
Insurance 1,250
Miscellaneous Expense 5,000 ------------
Net Profit Before Tax ------------
Income Tax 25,000
Net Profit After Tax -------------
34
Your Tasks:
1. Based on the above Projected Income Statement of ArteCulante
Enterprises for 2009, compute for:
a. Cost of Goods Sold
b. Gross Profit
c. Total Operating Expenses
d. Net Profit Before Tax
e. Net Profit After Tax
f. Gross Profit Margin
g. Return on Assets
h. Return On Owner‟s Equity
2. Compare the Income Statement for 2008 and the Projected Income
Statement and answer the following:
a. Was there a change in the Profit Margin?
b. Is the ArteCulante Enterprises generating profit?
3. Justify if the enterprise owner can borrow additional investment
based on the result of your computations in II. a & b.
WORKSHEET 3
Balance Sheet
May 30, 2009
ASSET LIABILITIES
Cash 3,250 Accounts Payable 29,750
Accounts Receivable 25,000 Accrued Expenses 500 60,000
Inventory 31,250
Prepaid Expenses 500 ---------- Long-term Liabilities
Mortgage on Land &
Fixed Assets: Building 15,000
Land 6,500 Bank Loan 5,000 40,000
Buildings 12,500 TOTAL LIABILITIES ------------
Equipment 30,000
(Less Accumulated Depreciation) (9,000) ----------- OWNER'S EQUITY 100,000
Other Assets -
TOTAL LIABILITIES & OWNER'S
TOTAL ASSETS ----------- EQUITY -------------
35
Your Tasks:
1. Based on the above Two-Column Balance Sheet of ArteCulante
Enterprises for the December 30, 2008, compute the following:
 Total Current Assets

 Total fixed Assets
 Total Assets
 Total Owner‟s Equity
 Total Liabilities and Owner‟s Equity
WORKSHEET 4
Balance Sheet
May 30, 2010
ASSET LIABILITIES
Cash - Accounts Payable 128,500
Accounts Receivable 104,000 Accrued Expenses 500
Inventory 125,000 Bank Overdraft 21,000 ----------
Prepaid Expenses 1,000 230,000 Long-term Liabilities
Fixed Assets: Mortgage on Land & Building 27,500
Land 13,000 Bank Loan 10,000 ----------
Buildings 25,000 TOTAL LIABILITIES ----------
Equipment 44,500
(Less Accumulated
Depreciation) (28,000) 82,500 OWNER'S EQUITY 125,000
Other Assets
TOTAL LIABILITIES & OWNER'S
TOTAL ASSETS ----------- EQUITY ------------
Your Tasks:
1. Based on the above Two-Column Balance Sheet of ArteCulante

Enterprises for the December 30, 2008, compute the following:
a. Total Assets
b. Total Current Liabilities
c. Total Long-term Liabilities
d. Total Liabilities
e. Total Liabilities and Owner‟s Equity
2. Compare the Balance Sheet in 2008 and the projected balance
sheet for 2009 and compute for the following ratio:
a. Current ratio
b. Liquid ratio
c. Asset Turnover
d. Accounts Receivable Turnover
e. Inventory Turnover
f. Ownership Ratio
36
3. Describe the efficiency and the financial structure of the enterprise
A. Instruction: The table below summarizes the financial assessment

tools you learned in Lesson 2.
 Using the Income Statement and Balance Sheet for 2008
and 2009(Projected) of ArteCulante Enterprises, fill in the
Numerical Value column what you have computed from Work
Sheet 6.1 to 6.4.
 On the Analysis Column give your analysis of the
business operation situation of ArteCulante Enterprise.
 After you completed the SUMMARY OF FINANCIAL
REPORT for ARTECULANTE ENTERPRISES, make a status
report enterprise owner. Use the format provided.
ARTECULANTE ENTERPRISES
SUMMARY OF FINANCIAL REPORT
Financial
Numerical
Assessment Ratio Analysis
Value
Tool
Gross Profit Margin
?
Profitability
Return On Assets
Liquidity Current Ratio
Accounts Receivable
Efficiency Turnover
Financial Structure ?
37
B.
Status Report
ARTECULANTE ENTERPRISES
2ND Quarter of 2009
i. Introduction (Not more than 50 words.)

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
________________.
ii. Financial Status:

(Provide Graphical presentations using 2005 as the
Benchmark year for the following:
a. Profitability (Profit margin, return on assets and
investments)
b. Liquidity
c. Efficiency
d. Financial Structure
iii. Summary of Monitoring and Evaluation Report conducted
a. Employee/Staff/Worker observed.
b. Results of the dialogue with personnel conducted
c. Results of the market and production plan reviews
iv. Future plans based on the financial status.

____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
v. Recommendations:
1. _________________________________________________________
2. _________________________________________________________
3. _________________________________________________________
Prepared by:
___________________________________
___________________________________
38
C. Based on the Status Report Recommendations, analyze the actual
operation of your business as outlined in your business plan by
filling-up the table below.
Business Operation
Factors Analysis Problems Met Actions
5 – attained successfully
3 – in-progress
1 – not attained
1. Financial Projection
2. Return on Asset
3. Return on Equity
4. Vision, Mission and

Values
5. Social
Responsibility
D. Answer the following:
1. How did your business performed for the year?

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
2. Will you continue your business operation based on you answer in

number 1? If not, why?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
39
LET US REMEMBER
1. The different tools used in monitoring business operations are:

a. bar graph
b. benchmarking
c. checklist
d. program matrix
e. indicator matrix
2. In order to monitor and evaluate the business operations we have
to employ some techniques like:
a. direct observation
b. dialogue with personnel
c. review market plan
d. review production plan
e. control supply and logistics
f. hands-on
3. The different quantitative tools used in evaluating financial
operations of the business are:
a. Profitability which include Gross profit Margin, Net Profit
Margin, Return on Assets and Return on Equity
b. Liquidity which covers Current and Liquid ratios.
c. Efficiency Turnover of accounts receivables and inventories.
d. Financial Structure which identifies ownership ratio.
4. Reporting results of qualitative and quantitative monitoring and
evaluation must be brief and objective. It should be regularly done
to keep abreast with the changes in the business environment.
Moreover, it should gear towards the improvement of the business
operations.
40
Post Test
Directions: Let us find out how much you have learned about
assessing business operations. Answer the questions below as
honestly as you can. Write the words or letter of the correct answers
in the provided answer sheet.
1. Which of the following statement gives the purpose of using a

supervision plan?
a. Assess the quality of activities performed by each member of
the enterprise.
b. Effectively monitor the business operations.
c. Ensure the successful operation of the business.
d. Utilize material and work force wisely.
2. Which is NOT included in the steps for developing a monitoring
system?
a. Defining indicators
b. Identifying components of the monitoring system
c. Defining the standards for indicators to be used
d. Identifying the market share to be monitored
3. Among the common tools for qualitative monitoring and evaluating
business operations, which will best describe a market position?
I. Bar Graph III. Program Matrix
II. Benchmarking Matrix IV. Checklist
a. I only b. I & II only c. I, II, III only d. I, II, III, and IV
4. What is the correct step in benchmarking?
I. Determining the differences in the process of your business
and that of the benchmarked business.
II. Selecting an organization to be benchmarked.
III. Contacting the “benchmarked” organization.
IV. Visiting the site to collect the needed data.
a. I, II, III, IV c. III, IV, II, I
b. II, III, IV, I d. II, III, IV, I
5. It is used to diagnose a current situation of the business operation
and to evaluate the variations of business activity.
a. Program Matrix c. Bar Graph
b. Indicator Marix d. Checklist
6. It is a technique in financial analysis, which compares two or more
year‟s financial data.
a. Horizontal analysis c. Graphical analysis
b. Vertical analysis d. Quantitative analysis
7. It states various years financial data in terms of a base year.
a. Vertical Percentage c. Trend Percentage
b. Horizontal Percentage d. Capital Percentage
8. Which is not needed in computing financial ratio?
a. Income Statement
b. Two-column balance sheet
41
c. Statement of Assets and Liabilities
d. Statement of Account
9. When you computed for the Return on Assets of your business, you
found out that the ROA increased from 12% to 18%. How would
you interpret this increase?
a. It means that the expense increases faster than the sales
revenue.
b. It means that there is an increase in assets.
c. It means that the sales is greater than the liabilities.
d. It means that the rate of profit increases faster than the asset
base.
10. In computing the Cost of Goods sold, how do we treat the Ending
Inventory?
a. Subtract it to the Beginning Inventory
b. Subtract it to the Operating Expenses
c. Add it to the Purchases
d. Add it to the Beginning Inventory
11. When do you say that “a business is liquid”?
a. When the current asset is greater than current liabilities
b. When the current asset is less than the current liabilities
c. When the current liabilities and current assets are equal
d. When the current liabilities is greater than the asset
12. In computing the efficiency ratio, which two entries in the balance
you will use?
a. Sales and total liabilities
b. Sales and total equities
c. Sales and total assets
d. Sales and the total assets and liabilities
13. The average collection period of ArteCulante Enterprise is longer
than 90 days. What does this mean?
a. ArteCulante Enterprises has many prompt payers.
b. ArteCulante Enterprises has many slow payers
c. ArteCulante Enterprises‟ bad debts will increase
d. ArteCulante Enterprises‟ payment collection is effective
14. In the year-end inventory in your business, you found out that the
there are lots of stocks left unsold. How this will affect your
Inventory Turnover?
a. It will equalize the rate inventory turnover
b. It will normalize the rate of inventory turnover
c. It will increase the rate of inventory turnover
d. It will decrease the rate of inventory turnover.
15. If the ownership ratio of the enterprise is 60% it means that
majority of the enterprise‟s assets belongs to the:
a. owner c. creditor
b. government d. debtor
42
RESOURCES:
o pencil
o calculator
o handouts
o writing materials
o worksheets
o templates
REFERENCES:
Pfeffer J., and R Sutton, The Knowing-Doing Gap: How Smart Companies
Turn Knowledge Into Action, Harvard Business School Press, 2000.
Davenport, Thomas (1993), Process Innovation. Harvard University

Press: Cambridge, MA.
Suchman, Lucy (1987), Plans and Situated Actions. Cambridge

University Press: Cambridge, England
Camposano, Jorge A. (2007), Entrepreneurship for Modern Business.

National Bookstore: Manila, Philippines
Cuyugan, Jorge H. (2005), A Business Planning Manual. Booklore
Publishing Corp.: Manila, Philippines
….Module on Problem Solving and Decision Making, (2007), Department of
Trade and Industry: Pasay City, Philippines.
….Business Plan, Breadwinner (2007), Muntinlupa Business High School,

Muntilupa City, Philippines.
http://smallbusiness.findlaw.com/source/forms/be4_4_1.doc
43
KEY TO CORRECTION
Post Test
1. a. 6. a 11. a
2. d 7. c 12. c
3. b 8. d 13. b
4. d 9. d 14. d
5. b 10. a 15. a
44
ACKNOWLEDGMENT


Jones Rural School
Group Leader




Mrs. Leona M. Tomas

Writer/Facilitator:
Mr. Rene G. Delfino
45
ACKNOWLEDGMENT


Jones Rural School
Group Leader


Writer/Facilitator:
Mr. Rene G. Delfino

46
ACKNOWLEDGMENT


Jones Rural School
Group Leader

Writer/Facilitator:
Mr. Rene G. Delfino


47

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Republic of the Philippines

Unit of Competency : Finalize Evaluated Business Plan

Module Title: Finalizing Evaluated Business Plan 1

How to Use this Module 1

Summary of Learning Outcomes 2

The unit of competency “Finalize Evaluated Business Plan”

You are required to go through a series of learning activities in

UNIT OF COMPETENCY : Finalize Evaluated Business

MODULE TITLE : Finalizing Evaluated Business

MODULE DESCRIPTION : This module covers the

SUGGESTED DURATION : 10 Hours

SUMMARY OF LEARNING OUTCOMES:

Upon completion of the module the students should be able to:

LO1. Finalize Evaluated Business Plan/s

At the end of this module, you should be able to:

WHAT DO YOU ALREADY KNOW?

1. Description of the target market is formed in the_________ part

WHAT IS THIS LESSON ABOUT?

This lesson deals with how to critically evaluate a

WHAT WILL YOU LEARN?

At the end of the lesson, you should be able to:

1. Finalize the evaluated business plan based on the set

Business Plan is a step by step guide in the thorough operation

Pumpkin Sorbet is cooperative in nature. It is to be run by the

A. Malnutrition is one of the major problems, Filipinos school children

B. Pumpkin Sorbet, a pumpkin-flavoured ice cream that will surely

In the name of good customer service, Pumpkin Sorbet envisions as

Pumpkin Sorbet aims to produce and sell healthy, clean, nutritious

Pumpkin Sorbet as a business, commits to give its customers the best

A. Research and Analysis

Today’s sorbet stalls are believed to have a little improvement for

Pumpkin Sorbet is a business selling a pumpkin- flavoured sorbet. The finished

Figure 1: Organizational Chart

B. Contribution to the Business

Owners– it is responsible for the management and

Pumpkin Sorbet has a very simple operational plan. It starts from

B. Monitoring and Evaluation

Jul Aug Sep Oct Nov Dec Total

Table 5 shows the monthly projected cost &

PARTICULAR EQUITY LOAN TOTAL

Equipments PhP 6,440.00 PhP 15,000.00 PhP 21,440.00

TOTAL PhP 6,440.00 PhP 15,000.00 PhP 21,440.00

Rent Deposit PhP 3,000.00 0.00 PhP 3,000.00

Pre-Operating Expense PhP 15,000.00 0.00 PhP 15,000.00

Grand Total (%) 36.5% 63.5% 100%

2008 2009 2010

Projected Income for the year is expected to by at least rise by 20%

A. Long- Term Desired Outcomes

B. Social Impact in the Community

C. Business Impact in the Community

RUBRICS FOR BUSINESS PLAN PAPER EVALUATION

Description Rubric Rating

B. Now after you have formulated your questions, let it be

Business Plan is a blueprint to guide your business

LET US APPLY WHAT YOU HAVE LEARNED

Being an entrepreneur, you must have an effective

ACTIVITY: Think of a simple business you want to engage in.

is a registered business engaged in

Business goals are as follows:

a. The operation started on

1. Description of the Business

4. Location of the Business

A competitor’s profile includes price, quality, location, image