BACKGROUND

FDC Corporation is a business establish for production of doughnuts with all

natural ingredients. The corporation will introduce and manufacture a new and healthy
doughnut, known as fruity doughnut coconut, as their main product. The business also
sells bottled juice and coffee as other income.
Fruity doughnut coconut is a doughnut made from local fresh fruits and coconut
flour. Upon developing this product, we considered the ingredients to be used and the
benefits to its consumers. Instead of using regular flour, the company will use coconut
fruit to make coconut flour. As we all know, coconut is abundant here in our country and
by using local fruits, we are helping the local farmers of the country to increase their
income and the demand for their product. Therefore, coconut fruit and other fruits were
directly bought from the local farmers in the Philippines. In addition, all other ingredients
are all natural to avoid the diseases and complications that affect their health.
To compare artificial flavorings over fresh fruits with their side effects and health
benefits, fresh fruits contain vitamin c, minerals, dietary fibers, and other nutrients that
were good for your health. Most fruits are low in fat, sodium, calories, and no cholesterol.
Fruits are part of a healthy diet that may serve as a protection against types of cancers,
heart diseases, obesity, type 2 diabetes, high blood pressure, developing kidney stones,
and decrease bone loss (Why is it important to eat fruits?, 2015). Artificial flavorings
consist of chemicals that do not exist in nature and are usually made from petroleum
(Teplitsky, 2010). Also, artificial flavorings are known for side effects such as brain
tumors, cancers, dizziness, nausea, mental confusion, seizures, depression, DNA damage,
allergies, fatigue, anxiety attacks, kidney problems, and high blood pressure (Organics,
n.d.). So, to choose between artificial flavorings and fresh fruits, it is better to pick fresh
1

fruits to avoid illnesses that were brought by the chemical contents in the artificial
flavorings.
As for the coconut flour, it is made of only coconut meat. Coconut flour is the
best substitute for regular flour, is also gluten-free, rich in dietary fiber, high in beneficial
fats, safe for diabetics, and packed with protein (5 Health Benefits of Baking with
Coconut Flour, n.d.). For the reason that it is gluten-free, there are only few people that
are allergic to coconuts and making this flour the best substitute for any other flour such
as wheat, rye, and barley. It is proven that by adding coconut flour to your diet, you can
reduce risk of developing heart disease, lower cholesterol levels, and serves as a guard
from cancer and diabetes (Innovative Food Science & Emerging Technologies, 2006).
Coconut flour has dietary fibers that cannot be digested. Therefore, it does not have
calories and it is also ideal for those who want to reach or maintain their healthy weight.
For the reason that coconut flour does not have calories, it only has a slight impact on
blood sugar levels. Lastly, this is ideal for vegetarians, bodybuilders, and for the general
public who needed cell repair and growth.
For our product to be more appealing to consumers, we will decorate it with
chocolate, maple, cinnamon, and sprinkles. However, we will make sure that each
doughnut would receive the exact amount of toppings to limit the sugar content but yet
still maintain the sweetness of doughnuts and insuring its signature quality taste.

HISTORY
There were records that show that the Dutch were making doughnuts or known as
olykoeks or oil cakes as early as mid-19th century. It all came from Elizabeth Gregory,
the New England ship captains mother. She cleverly made deep-fried dough with her
sons spice cargo so that her son, Hanson, and his crew could store pastry for their
voyages (Taylor, 1998).
The origin of the name doughnut was highly debated. Some say it refers to the
nut that was placed in the middle to prevent the uncooked center. While, others refer to
dough knots which were popular shape in the mid-19th century. However, the first
written record of the word doughnut is in Washington Irvings 1809 publication, A
History of New York. But in early 1900s, the word was shortened to donut. As of
today, both doughnut and donut are acceptable in the English Language (Moncel,
2014).
However, this is the history of ordinary doughnut. As for the history of fruity
doughnut coconut, it was just an ordinary weekday while we are on our break time, we
happened to order a regular doughnut in the nearest doughnut store at school. Then, one
guy says Hey you are eating a doughnut. I thought you guys are on a diet. And that is
where the conversation about the contents of doughnut started and we ended up doing our
own research regarding the health benefits of an ordinary doughnut. We found out that
most doughnuts, especially the popular ones, are made of artificial flavorings that are not
really good for our health. This is how we began to think of making our own version of
doughnut, a doughnut that is made of all natural ingredient, healthy and yet, delicious.
This is also the reason why we came up with fruity donut coconut.

LITERATURE
The feasibility study of students from Capitol University in Cagayan de Oro City
is about Veggie Bread, which is a healthier variety of breads. The purpose of their
feasibility study is to introduce breads made from vegetables that most people dont eat,
like ampalaya (bitter guard) and talong (eggplant). Their product also promotes
nutritional value consumers will get when they consume their product. With the same
intention of introducing healthy but delicious snacks, our own feasibility study came up
with a snack that can satisfy the need for nutritious snack and a tasty snack. The Veggie
Bread can serve as a guide to our own feasibility study. However, FDC doughnuts will be
a lot different from this Veggie Bread. Firstly, instead of using vegetables to make the
product more nutritious, FDC will use fruits as an ingredient. Also, FDC doughnuts will
use a special kind of flour for its dough coconut flour to make the product more
nutritious than any doughnuts in the market. All in all, the Veggie Bread feasibility study
can be a great help in making FDC doughnuts own study.
Another feasibility study similar with the FDC doughnuts is the Big O
Doughnuts, which is a line of baked doughnuts with sugar-free dip and yoghurt fillings.
The product is also similar to FDC doughnuts except for its ingredients. The Big O
doughnuts also offered as an alternative to classic, unhealthy doughnuts. However, The
Big O Doughnuts targets students and young adults of the middle upper class. On the
other hand, the target market of FDC doughnuts, are not classified in any class, and FDC
doughnuts price are made affordable for anyone. The Big O Doughnuts feasibility study
can also guide FDCs own study in improving and making it better for customers.

MARKET STUDY
A. Product description
Fruity Doughnut Coconut is a bread snack that
is

designed to provide more nutrition to those who

will consume it and still be able to enjoy a tasty
food for a snack. FDC is basically baked bread
with a fresh fruit inside. What made this snack
unique other than having a fresh fruit inside it is
that the dough that will be used will be made
from coconut flour. This snack will come in its
classic stick shape; basic geometrical shapes
like circle, square, and triangle; and letter and

numbers for purposes depending on the customer.

This product can be an everyday snack for any gender or age. 74% of Filipinos
say that they take snacks mainly because it is a provider of nutrition (Filipino consumers
love a good snack, October 01, 2014). Thus, the main purpose of producing this product
is to give market consumers alternatives when choosing a tasty snack that at the same
time is a healthy snack. This would help students to broaden their snack market into a
more nutritious area and hopefully to lessen their buying of unhealthy snacks. This would
also be the case when it comes to children. Parents would definitely buy this product in
hopes of getting their children to eat delicious healthy snacks.
The major users of the product would be the teenagers. A 2007 Australian survey
showed that fruit consumption goes down in adolescence, and intake of saturated fat and
sugar is high (Food for teenagers, (n.d.). Due to this, it is more logical to make teenagers
5

the major user of the product because it can help them to increase their fruit intake. With
the help of its refreshing taste, teenagers can switch to eating fruits instead of unhealthy
snacks with high saturated fat and sugar.
Teenagers will be the major consumers of Fruity Doughnut Coconut. In that case,
the product will be distributed to areas with high number of teenagers like schools.
Specifically, FDC will first launch in Malayan Colleges Laguna where there is a high
number of teenagers aging from 15-20 years old.
A. Demand & supply analysis
Teenagers will be the products major consumer, but, nonetheless, the product will
also have other consumers which are divided by these segments.
Table 1. Market Segmentation
Segments
Benefits
Adults
Nutrition

Teenagers

Health Conscious

Children

Age
Psychographics
25 and above Professionals
Parents

Nutrition
15-20
Tasty snack
Fast but
nutritious food
Healthy snack 18+
Less sugar
than regular
doughnut
Rich in fiber
Fruits for
snack
Healthy and
1-14
tasty snack

Demand

College Students

Undergoing diet
Professionals
Students

Wants tasty snack

Table 2. Number of students enrolled at Malayan Colleges Laguna

Term
Year
2011
2012
2013
2014
First Term
3, 429
3, 739
4, 295
4, 844
Second Term 3, 190
3, 479
4, 052
4, 542
Third Term
3, 063
3, 383
3, 823
4, 352
Fourth Term 1, 564
1, 664
1, 818
2, 102
Average
2, 812
3, 066
3, 497
3, 960

2015
5, 278
5, 034
4,351
2, 585
4, 312

Average number of enrollees

4312
3960
3497
2812

2011

3066

2012

2013

2014

2015

Average number of enrollees

Figure 1. Historical number of demands

During A.Y. 2011-2012, there were 2, 812 students enrolled at Malayan Colleges
Laguna. The number of students increased during the A.Y. 2012-2013 to 3, 066 and
increased again by about 400 students to 3, 497 students during A.Y. 2013-2014. The
enrollees further increased during A.Y. 2014-2015 to 3, 960 students. However, during
A.Y. 2015-2016, the number of enrollees dropped to 4, 312 students.
The number of students enrolled at Malayan Colleges Laguna during each year
represents the total demand market for the FDC doughnuts. Based on the trend from the
information, a projection of future demand market will be as follows:

Projected number of enrollees

5812
5460
4997
4566

4312

2016

2017

2018

2019

2020

Projected number of enrollees

Fig. 2 Projected number of demands

Based on this projected future demand market, the number of demands can be
formulated by multiplying the percentage of respondents who answered they will buy
FDC doughnuts.
Table 3. Number of MCL students who buy doughnuts
Number of students
Percentage of those who
buy doughnuts
4312
91%
Table 4. Annual demand for doughnuts
How often do MCL
Population of MCL
students buy
students who buy
doughnuts
doughnuts
Every day ( 24 days)
3, 924
Every other day ( 12
3, 924
days)
Weekly (4 day)
3, 924

Population of MCL students

who buy doughnuts
3, 924

Percentage

Demand for
doughnuts

1%
3%

942
1, 413

28%

4, 395

Monthly (1 day)

3, 924

68%

2, 668
9, 418 x 12 months

Annual demand

113, 016 students

In reference with the annual growth of Malayan Colleges Lagunas enrollees, this
is the projection of demand for 5 years for doughnuts.
Table 5. Projected Demand

Projected
Demand

2016-2017
113, 016

2017-2018
119, 673

YEAR
2018-2019
130, 970

2019-2020
143, 111

2020-2021
152, 342

Supply
Table 6. Different doughnut companies
Company
Size
Dunkin Donuts
It has a market
share of 14%,
following Mister
Donut

Location
Nationwide

Happy Haus
Donuts

It has ~400
branches

Mostly in Metro
Manila and Luzon

J. Co Donuts &
Coffee

It has ~38 branches

Mostly in Metro
Manila

Mister Donuts

It has a market
Nationwide
share of 19% and
has ~2,200 branches
9

Strategies
Dunkin Donuts rely
in improving their
coffee and satisfying
what their consumer
wants.
The company uses
the markets
awareness of their
product and its
affordable price to
lure consumers into
trying their product.
J. Co uses of the
creativity of their
doughnuts and the
promise of fresh
products every day
to make consumers
enticed
Attracts consumers
by their ads that
reminds consumers

Go Nuts Donuts

It has an average
market share of 1011%

Nationwide

Krispy Kreme

The market share is

at 12%

Nationwide

of their past and

because of their
good image
Attracts consumers
through their
entertaining
doughnuts, and it
creates a place in the
market by finding
the missing piece
from the market
The company
focuses on what
Krispy Kreme is
instead of following
trends and consumer
wants.

Supply is directly proportional with the demand, so the growth in demand each
year mirrors the growth in the supply of FDC doughnuts each year. The number of supply
is based on the average minimum and maximum number of production per day, which
420 doughnuts per day
Table 7. Projected Supply

Projected
Supply

2016-2017
120, 960

2017-2018
128, 085

YEAR
2018-2019
140, 176

2019-2020
153, 170

2020-2021
163, 049

2017-2018
8, 412

YEAR
2018-2019
9, 206

2019-2020
10, 059

2020-2021
10, 707

Demand-Supply Analysis
Table 8. Projected Supply Gap

Projected
Supply Gap

2016-2017
7, 944

10

It can be seen that supply is greater than the demand. This can be taken
advantageously because the demands of the customers are all satisfied. However, a higher
supply than demand is also caused by the high price of the product. So it would be good
to compare the prices of FDC doughnuts to other competitors doughnuts.
According to the projection, demand and supply are directly proportionate and
demand and supply should never outrun each other into growing faster than the other.
However, some factors can take a play and affect the market. Price can affect the
equilibrium of demand and supply of doughnuts. If prices of the ingredients for doughnut
rises, supply for doughnut can, in turn, decrease. On the other hand, if more consumers
demanded doughnuts, the supply for doughnuts can become short for the market.
Complimentary and substitute products can also disrupt the equilibrium. If the
demand for complimentary products like coffee increased, the demand for doughnuts can
also increase and could exceed FDCs supply of doughnuts. On the other hand, the
demand for doughnuts can also be critical, making it greatly lower than demand that it
disrupts the equilibrium, if the demand for substitutes like cupcakes increased.
The doughnut industry in the Philippines is already populated by foreign stores
like Krispy Kreme, Dunkin Donuts, and J. Co Donuts and Coffee, and they took up most
of the market share in the doughnut industry. Most of these foreign stores and other local
doughnut stores already have different branches in Metro Manila mostly and nationwide.
FDC is only starting and only have one branch. The maximum proposed production
volume is about 600 doughnuts per day. Compares with about 40,000 doughnuts per day
in the doughnut industry, FDC doughnuts only amount to 1.5% market share.
Price Study

11

Table 9. Price Study

Company
Happy Haus Donuts (Happy Haus Donut, n.d.).
Dunkin Donuts (Untitled photograph of Dunkin Donuts menu,
n.d.).
Krispy Kreme (Untitled photograph of Krispy Kreme menu,
n.d.).
Mister Donut (Mister Donut, n.d.).
GoNuts Donuts (GoNuts Donuts Menu, n.d.).
J. Co Donuts (Untitled photograph of J. Co Donuts & Coffee
menu, n.d.).
Famous Belgian Waffle (Untitled photograph of Famous
Belgian Waffles menu, n.d.).
Cakes (slices)
Cupcakes

Price (per piece)

Php 4.50-20
Php 20-55
Php 36-47
Php 13-74
Php 20-36
Php 42
Php 30-55
Php 45-55
Php 50-75

There was not much fluctuations when it comes to the prices of these products. So
it can be said that the factor that mostly influence the fluctuations is inflation. As there is
minor inflation every year in the Philippines, the prices of these products have also
increased slightly. Also, there wouldnt be much change or the effect will be negligible in
the demand if the prices of these products insignificantly increased or decreased.
The total cost of production amounted to Php 299, 644.56, divided by maximum
number of production per month which is Php 13, 824 equals PHP 21.68 cost per
doughnut. After much consideration, such as taxes and mark up, we have come up with
the FDC doughnuts price which is Php 32. The computation of product cost is fully
illustrated in Appendix F. Projected cost of production. In Appendix F., all the direct
materials, direct labor, manufacturing overhead, selling expenses, and administrative
expenses are considered in the computation of product price.

B. Marketing mix

12

Product
Fruity Doughnut Coconut satisfies the nutritious-but-tasty-snack needs of the
target markets. This product will be different from any competing products because
mainly, no other doughnut store or company has filled their doughnuts with fresh fruit.
Another thing, the main ingredient of the dough that will be used is coconut flour.
Coconut flour is better than wheat flour because it is high in fiber, has lower
carbohydrates, and it is gluten-free which is a great help to those people who are
allergic to wheat. Using coconut flour in baked goods is found out to lower glycemic
index - which is the measure of the impact of food on blood sugar (Cespedes, 2015).
Given this, FDC using coconut flour is a good news to the people with diabetes who
needs to watch a closer look on their blood sugar.
Customers will be sure to experience a refreshing snack when they buy FDC. The
fresh fruit filled in the dough are refreshing enough, but add the fact that the snack is also
as nutritious as it is delicious, FDC can be a lot more refreshing.

Place

13

The store of Fruity

Doughnut Coconut will
be placed at RLI
Building 3, South Point
Subdivision, Barangay
Pulo, City of Cabuyao,
Laguna. The commercial
building is just in front of
the school Malayan Colleges Laguna to ensure the store is closer to a great number of the
primary target market. The physical store will be a kitchen store in front, and the main
pantry in the background that would also serve as the companys manufacturing area. The
FDCs will be freshly prepared every day to assure customers that the products are
always fresh. Currently, as the business is just starting, it is assumed that there are no
distribution channels yet. However, it is projected that after 5 years, the company would
be able to have a delivery program of products to customers.
It is also wise to send the store to school fairs when necessary. We can send stall
to schools that are nearby Malayan Colleges Laguna whenever they have school events or
other activities. Barangay or city activities that have opportunities to sell foods are also a
target place of the company.

Price

14

Fruity Doughnut Coconut is valuable to the consumers because it is the only

doughnut made from coconut flour and has a fresh fruit inside it. FDC doughnuts health
benefits, taste, and affordable price will also be of value to the customers. After much
consideration, FDC doughnuts were priced at Php 32, which is already a good deal with
what FDC doughnuts can give to its customers.
There are no established price points when it comes to the doughnut industry.
Different doughnut stores prices their products based on their productions cost and some,
with the additional prestige pricing. The customers are price sensitive in a way that when
the price decreases in a small scale, it will gain you extra market share. If the price
increases by a small scale, it will be slightly noticed that there would be some profit
increased earned.
To make the customers even more satisfied with the product, FDC Corporation
decided to cut 20% to its listed price when nighttime falls to assure customers of the
freshness of our product.
The prices of the competitors product are almost the same with the FDCs. Even
without the price point, it seems that the prices of doughnuts are not that far from each
other. It just varies with the quality of each doughnut.
Promotion
Due to the modern age of technology, the first step to promote the business is to
create pages in social networking sites like Facebook, Twitter, and Instagram. It is easier
for other people, even from outside Laguna, to know what the company can offer them.
Fliers around MCL, Barangay Pulo, and even round the whole city would also be
necessary to further inform target markets of the product. Advertising in TV, radio and

15

other media with payment is out of the question as of the moment because the business is
just starting. It would be unwise to spend too much on advertising when advertising
online is free and more effective.
There is no seasonality when it comes to promoting because the product can be
bought by customers any time of the year. As food is a basic necessity and is needed
every day, it further demonstrates that there is no need to set a seasonal promotion.
Most of the competitors like Dunkin Donuts and Mister Donuts use social media
advertising and television and radio advertisements to reach out to their customers. Their
promotional activities doesnt affect FDCs promotional strategies that much while those
two companies are on a national level, FDC is just starting so it is unwise to match their
television and radio advertisements.
C. Factors affecting the market
There are many factors that will cause an effect in the marketing of the FDC.
These effects can be major or minor effects. For convenience purposes, only those factor
that have major effects on the product will be presented.
Substitute Products
Doughnuts, whether the classic doughnuts with lots of sugar and carbohydrates or
the doughnut that FDC Company offers which is more nutritious, still have a number of
competitors because there are many substitutes that customers can exchange it to. These
substitutes includes other baked products such as cupcakes, cookies, brownies, and bread;
sandwiches; yoghurt; and many more. Sandwiches and bread is included in the top three
snack foods Filipino prefer, it is actually in the top spot. Doughnuts are considered as
bread also, and with sandwiches and doughnuts tied in the top spot, sandwiches are the

16

obvious top choice when looking for alternative for doughnuts. The popular sandwiches
in the Philippines are BLT or Bacon, Lettuce, and Tomato and Clubhouse or Club
sandwich. Cupcake business is also rolling in Philippine market. It started in USA and
now reaches the Philippines. As of 2013, there are at least three big cupcake store in the
Philippines namely Cupcakes by Sonja, Sophies Mom, and Vanilla Cupcake Kitchen.
Beside this, home-based entrepreneurs are also appearing, selling their products through
online ordering (Guerrero, 2013). In short, cupcakes are also a serious competition
because it is a good substitute for doughnuts, not only for its taste but also for its large
market in the Philippines. Other substitutes have also the same level of threat to the
doughnut demand in the Philippines.
Complimentary Products
Complementary goods are a good way of identifying which product will
increase the demand of another product, would also increase its sales. However,
complimentary good also is a way of having decreased demand due to increase of price
of one product.
Mostly, complimentary goods to doughnuts are beverages, and the most
popular is coffee. Other doughnut restaurants like Dunkin Donuts and Krispy Kreme
Donuts has used this to further increase their sales. Dunkin Donuts have a hot beverages
category on their menu that includes espresso, cappuccino, hot chocolate, etc. Krispy
Kreme and J. Co Donuts also have a vast variation of coffee drinks, both hot and iced.
The reason for this great combination lies on the mere taste of both foods, according to
customers. They complement each other because the bitter taste of coffee balances out
the sweet taste of doughnuts (Martinez, n.d.)

17

Besides coffee, other beverages like soft drinks, tea cold or hot, and juice
drinks are also complements doughnuts. This is because these drinks also balance the
sweet taste of doughnuts.
Marketing Tools
Promotion activities would be the most effective marketing tools when it
comes to selling or marketing foods. This is because food businesses have many
marketers; therefore, there are many competitors, whether it is a substitute, in the same
line of product, or even in different categories. Promotion activities are a huge factor that
can affect the market of doughnuts and other baked items. When it comes to baked items,
appearance or its aroma is the first thing that consumers consider. Appearance, thus, have
an essential part to play to make the product more appealing to customers as appearance
allows the customers to establish expectations about the foods quality (Schrder, 2003).
Therefore, advertisement showcasing the quality of doughnuts around the Philippines
through an appealing appearance is game changer to start with.
Discount offers, bundle pricing, promos, and other pricing strategy can also
affect the market. Filipinos spend more on foods and beverages than any other things like
education and clothes. In fact, Consumer Financial Survey (CFS) of the Banko Sentral ng
Pilipinas conducted a survey concerning on how Filipinos spend their money. According
to the survey, a common Filipino family has an average income of Php 20,000. The result
of the survey stated that about 39% or Php 7,700 of the average income of 20, 000 went
or was spent on food and beverages (What do Filipinos spend their money on, n.d.).
However, even with this fact, Filipinos are still smart enough on spending their money.
That is why pricing strategies are still effective on luring customers into buying products.

18

Stores that are using an excellent pricing strategy have definitely more advantage than
those stores that do not.
Price of Inputs
Increases and decreases on the price of inputs needed for the product have an
effect on the market. These inputs are land, labor, capital, and entrepreneurship. Land
refers to the natural resources that an entrepreneur will use to produce its products, and it
not only refers to a literal land but also includes what it produces. Labor is the time and
effort that people put into the product to make the product. Capital refers to the
machinery and tools to be used to achieve the same result as land and labor. It could also
mean the money literally capital that will be used as the foundation of the business.
Lastly, entrepreneurship is the combination of these three factors of production. Now, if
the prices of these inputs increased or decreased, it means that the price of the output will
also increase or decrease. This will send the market on a new trajectory and can make the
product in demand, have lower sales, or even to point of obsoleteness.
Improved Technology
Improved technology have always one of the major factors considered that
can create a change in any particular market. For one, better technology allows
entrepreneurs to produce a product at a lesser cost but with the same or better quality
(Gregory, n.d.). In the baking industry, the rivalry when it comes to technology lies on the
oven which is the basic equipment that every kitchen needs. The improved technology
of modern ovens has an advantage versus the traditional ovens. Modern ovens have the
ability to keep track or measure time that allows for the output to have better quality. It
also have the ability to quicken the time a product needs to be baked, compared with the

19

time it needs when using traditional ovens. There are also now infrared ovens which
uses electric coils or ceramic plates heated by flames to generate and transmit infrared
energy to the surface of the product without heating the surrounding air. These infrared
ovens are said to lower the time of baking, leaves lesser oven footprint, and decreased
oven emissions. Other modern ovens also have reflective coatings that decreases fuel
consumption that also lower costs and emissions (Culliney, 2013). These improvements
on ovens are a great advancement in the baking industry competition. According to ABA
or American Bakers Association, these improved baking technologies can decrease
energy costs and increase productivity while still having quality. This technological
advancement can affect the market by giving the entrepreneurs lower production costs,
and higher number of demands. Due to the speed upped process as a result of modern
enhancement, customer satisfaction could also be increased and this would also result in
higher demand.
Number of Suppliers
Firms across different industries enter and exit their specific industries from
time to time. These entry and exits affects the industry in the advantageous form, the
disadvantageous, but more often than not, in both forms. Entry in the doughnut industry
would be advantageous if it would set the doughnut industry in a new positive trajectory.
An entry of good doughnut business could increase the demand not only for the new
entry firm but also across the doughnut industry. However, if too many firms entered, it
would flood the industry and thus, the demand would be stretched across different firms,
resulting to all firms with lower demands. On the other hand, though an exit of a firm in
the industry would mean more customers and higher demand for the remaining firms, this

20

would mean the market will have lower supply. If the industry has a high demand at the
time a firm exits the industry, there will a price increase that will occur.
Price Changes
There are many factors that cause price changes. As mentioned before, it can
be caused the change in prices of inputs of production. Another cause of inflation is the
rising of the general level of prices of products that means that the purchasing power of a
certain currency is falling (Inflation, 2016). Last January, Philippine Statistics Authority
(PSA) announced that the inflation rate during December 2015 was 1.5%, which was
lower than the inflation rate during November 2015 which was at 2.7% (PSA: Inflation
Rate, 2016). Though there is proof that inflation rate got lower recently, there is still the
fact that there is inflation and it affects the overall market in the Philippines. Inflation in
the Philippines has also affected the price increase in the doughnut industry before and it
will further increase the price of doughnuts in the future. This is a big factor to consider
since customers, especially Filipino customers, are smart when it comes to buying. Price
increases like these in the doughnut industry would result to customers preferring
substitutes rather than the doughnuts itself.
D. Survey results
In able to have a more detailed and accurate study, we surveyed 100 students
from Malayan Colleges Laguna. We decided to survey them because they are the main
target of FDC. The respondents answered to a total of 13 questions that includes
demographic questions, product questions, and buying pattern.
How much is your daily allowance?

21

Figure 3. Daily allowance chart

Figure 4. Daily allowance

Among the 100 respondents, only 2% - which is the lowest have a daily
allowance of Php 1-50; 6% have the daily allowance of Php 51-100; 33% have Php 101150 daily allowance; 36% - the largest percentage of students, have Php 151-200 daily
allowance; only 14% have Php 201-250 daily allowance; and the remaining 9% of the
respondent have a daily allowance of Php 251 and above.

How much are you willing to spend on snacks?

22

Figure 5. Willingness to spend on snacks chart

Figure 6. Willingness to spend on snacks

The result shows that 3% of the respondents, the lowest number of
percentage, are willing to spend Php 10 on their snacks; 16% are willing to spend Php 20;
19% are willing to spend Php 30; 43%, which is the largest percentage of respondents,
are willing to spend Php 50 for snacks; and the remaining 9% have other answers,
ranging from Php 65-300.

Buying Pattern: Do you ever purchase doughnuts?

23

Do you like fruits?

Figure 7. Buying pattern chart

Figure 8. Buying pattern

In this buying pattern questions, 91% of the respondents said that they
purchase doughnuts and only 9% do not. In the second question, 84% of the respondents
said that they like fruits while 16% stated that they do not.

Where do you go when you are looking for doughnuts?

24

Figure 9. Doughnut places chart

Figure 10. Doughnut places

According to the survey, 77% of respondents, the highest percentage, go to
Dunkin Donuts when they are looking for or craving for doughnuts; 59% go to Krispy
Kreme; 16% go to Gonuts Donuts; 36% go to Mister Donuts; 37% go to J. Co Donuts;
and only 4% of the respondents go to others. The 4% specified Happy Haus Donuts or
the doughnut house in the cafeteria in Malayan Colleges Laguna and whichever is nearer.

How often do you purchase doughnuts?

25

How often do you buy snacks?

Figure 11. How often do they purchase doughnuts and snacks chart

Figure 12. How often do they purchase doughnuts and snacks chart
The results show that only 1% of the respondents purchase doughnuts every
day; 3% purchase every other day, 28% purchase weekly; and the largest percentage,
which is 68%, purchase doughnuts on a monthly basis.
53% of the respondents buy snacks every day; 25% buy snacks every other
day; 18% buy weekly; and 4% buy snacks monthly.

What features do you look for when you purchase doughnuts?

26

Figure 13. Features of doughnut chart

Figure 14. Features of doughnut

Among the six choices we gave to the respondents on how they want their
doughnuts, 29.29% out of 100% want their doughnuts to be healthy; 76.77% out of 100%
want it to have an affordable price; 78.79% want a doughnut that can satisfy their
appetite; 66.66% wants it to have a variety of flavors; 33.33% wants it to be eyegrabbing; 29.29% wants it to be unique. Other responses includes it must be delicious,
chocolate, and it must be freshly baked and no added chemical preservative.
Product Questions:

Will you buy a fresh fruit wrapped in dough made from coconut
flour

(FDC Fruity Doughnut Coconut)?

27

Do you think Fruity Doughnut Coconut is nutritious than regular

doughnut?
Do you think Fruity Doughnut Coconut will suit your taste?

Figure 15. Product questions chart

Figure 16. Product Questions

80.61% of the respondents said that they will buy Fruity Doughnut Coconut
as explained in the question and only 19.39% said that they wont buy it. 91.84% said
that they think FDC is more nutritious than a regular doughnut and only 8.16 said that

28

they dont think its more nutritious than a regular doughnut. 74.49% said that they think
FDC will suit their taste and 25.51% said that they think FDC will not suit their taste.
Majority of the answers of the respondents is still in favor for the FDC Corporation.
How much are you willing to buy this Fruity Doughnut Coconut?

Figure 17. Willingness to buy Fruity Doughnut Coconut chart

Figure 18. Willingness to buy Fruity Doughnut Coconut

When asked how much the respondents are willing to spend for Fruity
Doughnut Coconut, 46.94% they are willing to buy FDC for Php 20; 28.57% will buy
FDC for Php 30; 9.18% are willing to spend Php 40; 6.12% are willing to spend Php 50;
and the remaining 9.18% are willing to spend different amounts. Most of them are lower

29

amounts that the lowest given amount which is Php 20 varying from Php 0-15 and a
higher amount of Php 100.
E. Analysis of the data gathered
Based on the survey and other information gathered, it is projected that the
demand for doughnuts will be the same demand for FDC doughnuts. The computations
are shown in the Demand & Supply Analysis part. Refer to Table 4. Projected demand.
The 5-year projection based on the percentages of the respondents answer is shown.

30

TECHNICAL STUDY
A. The Product
We are going to create a baked fruity doughnut and sell it to the public. It may
look or shapes exactly like a regular doughnut but this is not just any donut. Instead of
using artificial flavorings, we are going to add fresh chunks of fruits in it to make it more
special. And for it to be appealing to the eyes of the youth, we will create different shapes
and sizes and add some cute decorations. As for the content of the doughnut, same old
ingredients, such as butter, milk, yeast, sugar, and salt, would work but we will add a
variety of diced fruits in it. In exchange of regular flour, we would use special flour that
was made of coconut or coconut flour. For the doughnut itself, we would add various
fruits like apples, strawberry, cherry, and other fruits to create an apple doughnut,
strawberry doughnut, cherry doughnut, grapes doughnut, kiwi doughnut, or maybe a
mixture of two or more fruits in a single doughnut. For the doughnuts coating, it could
be cinnamon, maple syrup, chocolate, and sprinkles.
The use of artificial flavoring is known to cause many problems such as nervous
system depression, dizziness, chest pain, headaches, fatigue, allergies, brain damage,
seizure, nausea, genetic defects, tumors, bladder cancer, and other type of cancer and
diseases (Side Effects of Artificial Flavoring, 2013). So to avoid those diseases, we
decided to develop a product that was fresh, healthy, and nutritious by adding a variety of
fruits with the intention that the consumer will get the vitamins they need. In addition, we
have decided to use coconut flour as an alternative for regular flour. Besides, there could
be many benefits from this, namely: it is gluten-free, hyper allergenic, fewer digestible
carbohydrates than other flour and vegetables, and can help you reach your healthy

31

weight. For the reason that there are few people who is allergic to coconuts, it is regarded
as hypoallergenic and making the coconut flour ideal for baking. There could be no
calories in coconut flour since the dietary fibers in coconut flour cannot be digested
(Mercola, 2016). Therefore, coconut flour would be the best substitute for any other flour.
As for the shelf life of a regular doughnut, it would stay fresh for about 1 to 2
days at a room temperature and it should be covered with foil or plastic wrap to prevent
drying out. Doughnuts would last for a week or more if refrigerated and two to three
months if store in the freezer (Food Storage, 2016). As for the shelf life of the fruits, a
table is provided below:
Table 10. Shelf Life of Fruits. (Romine, 2013)
1-2 Days
2-4 Days
Banana
Avocado
Cherry
Grapes
Strawberry
Pineapple
Raspberry

4-6 Days
Blueberry
Grapefruit
Mango
Orange
Peaches
Pears
Plums

7+ Days
Apples
Kiwi
Lychee

Therefore, if fresh fruits and regular doughnuts combined, its shelf life would be
based on the fruits in the doughnut and because it is combined, we can assume that it can
last for more than a week or a month if store in a cool dry place with a proper cover to
prevent it from drying. These fruity doughnuts would surely remain fresh for about 1 to 2
days but still edible up until it reaches its limit and spoils.

B. Manufacturing Process

32

These donuts would undergo the same production process as regular doughnuts,
as illustrated in the figure below (Figure 19. The Production Process). From the storage
of raw materials or ingredients, the man on duty would measure all the ingredients to be
used in production of doughnuts per batch. When he already measured it, he would go to
the mixing station and mix all the ingredients, except the fresh fruits, and he would again
prepare the needed ingredients for the next batch. Once he finished mixing, he will
transfer the dough to another container and leave it for a couple of hours to let it ferment.
Once the dough is fermented, he would mix the fresh fruits into the dough and another
employee would begin to gently shape each doughnut. After those procedures, he would
again leave the doughnut for 30 minutes to go through proofing.
When the doughnuts are quite puffy, it can now be put to the oven and ready for
baking. Then, bake the doughnuts for 15 minutes in a 375 degrees Fahrenheit or almost
200 degrees Celsius oven (Oven Baked Donuts, 2016). When the doughnuts are baked, it
will be transferred to the glazing station for coating it with cinnamon, maple syrup,
chocolate, and/or sprinkles but before that he would let it cool for about 5 to 7 minutes.
Subsequent to glazing, let the doughnuts dry for a while before storing it to the store or
refrigerating it. For tomorrows production, before all the employees leave work, they
would prepare at least 5 batch of dough and left it to ferment overnight so that when
tomorrow comes, the dough is ready to be shaped and proceed to the next process. For
the next day, while an employee shapes the donut, the measuring and mixing of
ingredients are still ongoing so that it would cover the batch of dough that was used. This
process will continue to repeat until there are still productions of doughnuts.

33

Measuring and mixing of ingredients

Fermentation of dough

Dough kneeding and shaping

Proofing

Baking

Glazing

Storage

Figure 19. The Production Process

As for additional process, instead of buying ready-made coconut flour and
importing them, we have decided to extract our own flour from coconut meat. Thus, by
using the fruit that was abundant in the Philippines, we are also helping the local farmers
of the country to increase the demand for their product and to increase their income. We
could allocate some time to create our own coconut flour for the production of fruity
doughnut coconut.
C. Plant size (Capacity) and Production Schedule
Factors affecting the plant size and the number of doughnut production would be
based on the size of the doughnut, capacity of the oven, volume of the ingredients,
capacity of the store, capacity of the storage and the market demand. Each tray consists
of 8 to 12 pieces of doughnuts. This barely depends on the space maximization of the
employee and the sizes of the doughnuts. The estimated minimum capacity of each tray
would be 8 pieces of doughnuts and each oven has room for 6 trays. In addition, we
34

would acquire 2 ovens for the business operation. 1 oven for production and the other is
for contingency plan. Therefore, the minimum number of donuts that we can produce per
batch would be 48 doughnuts per hour, as shown in the table below (Table 11. Minimum
and maximum number of doughnut production). On the contrary, the maximum capacity
of each tray would be 12 pieces if the space of the tray is maximized. As a result, the
maximum number of doughnuts to be produced would be 72 doughnuts per hour. The
display cabinet that we acquire can store up to 160 to 240 doughnuts. In addition, there
would be a refrigerator that serves as storage inside that can hold 240 to 360 doughnuts
more. All employees would work for about 8 hours a day for 6 days. Upon using the
minimum and maximum doughnuts per hour, we can only make a minimum of 6 batches
and a maximum of 8 batches of doughnuts a day. By using the maximum number of
doughnuts per batch and the maximum number of batches per day, we could produce 576
doughnuts per day and 3,456 doughnuts a week. This would all be possible if the
production process is continuous.
Table 11. Minimum and maximum number of doughnut production
6 Batches
8 Batches
Minimum
Maximum
Minimum
Maximum
Number of
Number of
Number of
Number of
Doughnuts
Doughnuts
Doughnuts
Doughnuts
Per tray
8
12
8
12
Per batch / hour
48
72
48
72
Per day
288
432
384
576
Per week
1,728
2,592
2,304
3,456
Per month
6,912
10,368
9,216
13,824
Store Capacity
240
360
240
360
Storage
160
240
160
240
If the store suddenly runs out of ingredients, it would affect the volume of
doughnuts to be produced. However, for us to prevent that from happening, we are going

35

to use an automatic order system. We would maintain a computerized record of all the
ingredients and when it reaches a predetermined order point quantity, it would provide a
notification to the users so that they could place an order to the supplier. Another factor
that affects the capacity of production would be the market demand. Market demand is
already discussed in the previous pages. But even though, the production of doughnuts
will be in accordance to stock and to compensate the demands of the consumer from best
seller to least.
D. Machinery and Equipment
In able for this business to fully operational, we have to acquire different
machinery and equipment. To begin with, we will first discuss about the machineries
needed in baking and any other machineries inside the business and to be followed by
some tools in baking. From the measuring station, we have an electronic measuring scale
to start the whole process. We need that measuring scale to achieve and maintain the
desired size and taste of each doughnut we sell. We also need to have some measuring
cups for flour, measuring spoons for small volume of dry ingredients such as salt and
sugar, a yeast spoon for the exact measurement of yeast, and liquid measuring cups for
water and milk. As for the mixing station, there would be a dough mixer for combining
all the ingredients and for creating the dough. There would be bunches of bowl to be used
and to be stored at the fermenting cabinet. Silicon pastry brush and a dozen of trays are
used for the shaping of doughnuts. Silicon pastry brush is for spreading butter on top of
the doughnut.
We need an oven for the doughnuts to be cooked and for us to produce more
doughnuts. We will acquire 2 ovens. Once the doughnuts are baked, it is now time to coat

36

it with cinnamon, maple, chocolate, and/or sprinkles. A powdered sugar shaker is used to
evenly distribute cinnamon to each doughnut. For the storage, there would be a
commercial kitchen refrigerator inside the kitchen portion of the business. This
commercial kitchen refrigerator has 3 doors and can contain 3 trays per layer. It has 10
layers. Therefore, it can contain 360 doughnuts if each tray contains 12 doughnuts.
As for the machineries in the store, we have a refrigerated display cabinet to keep
the doughnuts fresh and clean. The display cabinet can hold 4 trays per layer and has 5
layers. So with the display cabinet, the store can contain 240 doughnuts if each tray has
12 doughnuts. Also, the door of the display cabinet is glass so that consumers can see the
doughnuts available and choose among those flavors. The store also has tongs inside the
display cabinets for grabbing the doughnuts and we also have a water dispenser so that
they could quench their thirst. Water is free for all the costumers and there is also a rack
for used and unused glass on the side of the water dispenser for their convenience. We
also have a desktop to keep track of our sales, expenses, and inventories.
All machinery specifications and price ranges are listed on Appendix C.
Equipment Listing and Cost and for the flow of usage of equipment; it is on Appendix B.
Equipment Flow Sheet.
E. Plant Location
We are providing a little background about Cabuyao, Laguna and some reason
why the researchers pick this location. Cabuyao is a first class urbanized city in the
province of Laguna, Philippines. It is located at the western portion of Laguna and about
43 kilometers southeast of Metro Manila. Furthermore, Cabuyao city is formerly the
Richest Municipality of the Philippines and also the fastest growing municipality in

37

Laguna. This is evidenced with a large population of migrants working in the citys
industrial estate (City of Cabuyao, 2012).
Therefore, FDC Corporation would be located at RLI building 3, Pulo-Diezmo
Road, Cabuyao, Laguna. A map is provided below to help you locate the place (Figure
20. Plant Location). Due to the location of RLI building 3, we decided to invest there and
establish our business. It was near express way and therefore it was very accessible and
very convenient for the transportation of raw materials and the delivery of finished goods
if there are orders. To further illustrate the accessibility of the place, if we run out of
ingredients, we could easily get them in a shortest period of time and we would never run
late to each delivery since we can avoid all the congested places in each town.
We will also establish our business there for the reason that our target market
would be the students of Malayan Colleges Laguna. Since we will make the physical
appearance of the doughnuts appealing to the eyes of the youth, this location would give
our business the opportunity to grow. Upon knowing the behavior of our target market
and the use of modern technology, the students of Malayan Colleges Laguna would also
advertise our product by just posting to their social media accounts. They can easily visit
our place since the location of our store is in front of their school which making this
location very accessible for our target market.
For the electricity, the same price range per kilowatts in Manila Electric
Company, also known as MERALCO, would be applicable. Water supply would be
provided by the same supplier of the building. Additionally, drinking water would be
supplied by crystal clear that was located in RLI building 2. As for the cost of fuel to be

38

used in the transportation of raw materials and delivery, it would be less than the volume
of the fuel of a vehicle that passes through national hi-way.
We therefore conclude that this would be the best place to put up our business.

Figure 20. Plant Location

F. Plant Layout
Based on the selected location of the business, floor space of the location would
be 20.66 sq. meters. There will be a sufficient working space for production of doughnuts
inside the store. Please see Appendix A. Plant Layout/Equipment to further understand
the desired format for the equipment, facilities, supplies, and machineries.
To discuss further what is inside the business, it has two portions. The first portion
contains some comfortable sofa-like chairs and cute-looking tables in front of the display
cabinet and the cashier. The second portion would serves as the kitchen where it contains
2 ovens, a storage cabinet for the dough to ferment, a glazing station, mixing station,

39

measuring station, a sink, refrigerator for storing finished products, stock cabinet for the
raw materials, and a long and spacious table in the middle. Please refer to Appendix A.
Plant Layout for the supposed design of the business. We have decided to put things that
way for the reason of maximizing the work space and having a smooth work flow by
arranging all necessary equipment and machineries according to the production process.
As for the safety of the workers, there would be a fully equipped medicine cabinet above
the sink. Fire extinguishers are placed in positions in case there is a fire. There would be
also a back door for all the deliveries and also serves as fire exit. To ensure the safety and
sanitation of the place, all machineries passed quality inspections and are safe to be used
in the work place.
The sink is located at the right for the reason that it is beside the measuring station
and for the employees to retain the sanitation of the place. Next would be the measuring
station, from the name itself, it is the place where the employee measures all the
necessary ingredients and when he is done, he would give those ingredients to the
employee in charge of the mixing. After he mixes all the ingredients and makes the
dough, he would store it to the cooling rack in the left corner of the room near the back
door. When the dough is fermented, another employee would took the fermented dough
from the cabinet and gently proceed to the table in the middle to gently shape the dough
into doughnuts. Doughnuts will be left for another 30 minutes for proofing. Once it is
ready, those doughnuts are put to the oven for about 15 minutes and remains in there up
to 5 minutes before going to the glazing station. Once the cycle is over, an employee
would store these doughnuts in the refrigerator located at the left side of the room near
the door. The refrigerator was located there for the reason that if the store runs out of

40

doughnuts in the display cabinet, he would quickly get another batch from the storage in
the kitchen.
To sum it all, we designed the business that way for effective space utilization,
safety of each employee, and to maintain an orderly flow of production process.
G. Building and Facilities
Again, the location of our business would be at RLI building 3, Pulo-Diezmo
Road, Cabuyao, Laguna. To be specific, FDC Corporation is located at the first floor of
the building facing Saucy. As per definition, commercial building is a structure whose
50% or more of floor space is leased for commercial purpose (Commercial Building,
2016). Therefore, RLI building 3 is a commercial building. We will rent a space in that
building that approximately cost for about Php 13,500 a month.
For the size of the kitchen and the store, 60% or 12.39 square meters of the whole
space would be allocated to the kitchen and the other 40% or 8.26 square meters would
go to the store. The back portion of the site is used for kitchen and the other side is for the
store. Additionally, the dimensions of the front door and the kitchen door are W900 x
H2100mm while the back doors dimensions would be W1600 x H2200mm. Back door is
almost double the size of the front door for the reason that it will be used for delivery and
for the machineries in the kitchen. It is intentionally have those dimensions so that all
equipment would fit through the door. Also, the drainage of the business uses the same
drainage as the other stores in the building or also known as the main drainage. Fire
extinguishers are distributed inside the store, 2 of them are located inside the kitchen and
the other 2 are located at the store. All the fire extinguishers are placed on the wall.
H. Raw Materials and Supplies

41

In producing fruity doughnut coconut, we need the ingredients listed in Appendix

G. Projected Cost per Batch.
The main ingredient for the creation of doughnut is coconut flour. This makes
fruity doughnut coconut extra special than other doughnuts. Coconut flour is gluten-free,
high in fiber, protein, and healthy fats, low in sugar, digestible carbohydrate and calories,
has a low score on the glycemic index, healthy alternative to other flour, and is free from
wheat and other grains (Axe, 2016). Also, coconut flour has a coconut smell and will
impart a coconut flavor on the baked goods if it does not have other strongly flavored
ingredients (What is Coconut Flour?, 2013). Basically, coconut flour is made of coconut
meat and water. We will order coconut fruit from the farmers and we will create our own
coconut flour from the coconut meat and coconut juice. Yeast is also needed for the
dough to ferment. Other ingredients such as milk, egg yolk, caster sugar, table salt,
unsalted butter are also needed in the creation of dough and to balance the taste so that
the consumers will not get tired of the flavor. These ingredients are highly available in the
supermarket or in the market. To complete fruity doughnut coconut, we need to
incorporate different fresh fruits in the doughnut. Therefore, we allocated a total amount
of Php 100 for fresh fruits per batch of doughnuts. In choosing the right fruit, we need to
consider its size, taste, and whether if it is ripe or not.
For the decoration of each doughnut, all the decorations are available in the
supermarket. Chocolate button is already shaped as a button when purchased and is ready
for consumption. White and semi-sweet chocolate blocks can also be bought in the
market or supermarkets. However, these blocks of chocolate are pure chocolates and need
to be melted or grated before using as a decoration. Cinnamon powder is also used as

42

another coating ingredient that will also add flavor to the doughnut as well as maple
syrup. Lastly, sprinkles are used the same way as chocolate buttons and grated chocolate
bars.
Again, the complete computation of cost of ingredients is on Appendix G.
Projected Cost per Batch along with the designated volume and cost per ingredient.
I. Utilities
Utilities mean useful features, or something useful to the home such as electricity,
gas, water, cable, and telephone (Utilities, 2016). This expense is considered mixed cost
since there is usually a fixed fee component plus a variable charge that is based on actual
usage (Utilities Expense, 2016).
In producing fruity doughnut coconuts, we definitely need oven. However, the
oven that we will acquire is powered by gas. By such, we need 2 tanks of 50Kg LPG gas
for a month. Each tank of gas of MetroGas cost Php 2,585 and is consumable for only 12
days.
For delivery purposes, we have a landline for taking calls and acquisition or raw
materials. Landline of the business is powered by PLDT. PLDT offered an affordable
price landline plan for only Php 600 a month. That plan consists of unlimited local calls
to PLDT and other networks. Other than that, we have allocated additional Php 400 for
other calls to mobile. Landline is useful for taking calls of costumers orders and for
making calls to supplier of raw materials. Additionally, we have decided to make Globe
as our alternative source of landline. Globe offers wireless landline plan for only Php 699
with unlimited local calls, unlimited NDD calls to Globe Landline, duo/superduo, and
unlimited calls to Globe and TM subscribers (Globe Home Phone FAQs, 2016).

43

As for the water supply and the drinking water of the business, it is supplied by
Laguna water and crystal clear respectively. Laguna water is a piped-water service
provider created through a joint venture of Provincial Government of Laguna (PGL) and
Manila Water Philippine Venture (MWPV) (Laguna Water, n.d.). Crystal clear would be
our supplier of 5gallons for drinking water. In addition, we estimated one 5gallons of
drinking water daily. However, Wilkins would be our alternative source of drinking
water. Estimated expenses for water supply and drinking water would be Php 2,460.
Obviously, the most important utility would be the rent and electricity. For the
rent, we allocated a fixed amount of Php 13,500 monthly. We also estimated a minimum
of Php 15,000 and a maximum of Php 20,000 for the monthly fee of electricity.
Electricity fee barely depends on production.
Please refer to Appendix D. Utilities Calculation for the complete computation of
utility expense.
J. Waste Disposal
Waste disposal is a proper disposition of a discarded or discharged material in
accordance with local environmental guidelines or laws (Waste Disposal, 2016). While,
waste management is the process of treating solid wastes and offers variety of solutions
for recycling items that do not belong to trash (Rinkesh, 2016).
As for the waste disposal of our business, we have 2 large trash bins which have a
dimension of L460 x W550 x H940mm inside the kitchen and 2 average size trash bins
with a dimension of D250 x H590mm in the store. To locate the positions of each trash
bins in the store, please see Appendix A. Plant Layout/Equipment. All trash bins are
marked with a triangle (

). We assume that most of the wastes in the store are

44

recyclables due to the use of paper and tissues. Also, we assume that wastes in the kitchen
are segregated whether it is recyclable or not. The remaining dough in the production of
doughnuts can be used in the next batch of dough or might as well use it to create mini
doughnuts or munchkins.
The cost of disposal and the quantity of production wastes vary in so many
factors. We cannot specify the proper quantity of doughnuts to be disposed for the reason
that it is based on the demand of the consumers and the production of the business.
However, we still assume that all the doughnuts would be sold before it spoils. We will
also be using the FIFO method or the first in, first out method wherein all raw materials
to be used were the first one we had acquired and the finished products to be sold were
the first to complete the production process.
There are many known types of waste disposal to be use such as landfills,
incineration/combustions, recovery and recycling, plasma gasification, and composting
(Rinkesh, 2016). However, we decided to sell the doughnuts that will eventually spoil as
animal feeds for pigs, fish, and other animals. Another waste disposal that can be useful is
composting. Composting occurs by allowing organic materials to sit in one place for
months until microbes decompose it (Rinkesh, 2016). By doing such, we are returning the
nutrients back into the soil in order for the circle of life to continue (What is
Composting?, 2016). As for the recyclables, we might sell it to a junkshop and any other
waste materials will be thrown properly at the junkyard.
Once we already know the actual flow of market demands, we can adjust the
quantity of production to minimize product waste. Instead of using plastic cups for free
water, we are providing drinking glass for their convenience and to reduce the quantity of

45

waste production. Furthermore, instead of using plastic bags and any form of plastic as
containers, we will use biodegradable boxes and bags if the costumer wishes to bring
those doughnuts at home.
K. Production Cost
The projected monthly total cost of production is illustrated in Appendix F.
Projected Cost of Production. However, the determination and classification of each item
in the production cost will be further explained in this section.
a) Direct Materials
According to Ballada (2014), direct materials are materials that become a
physical part of a finished product and their costs can be conveniently and
economically traceable to the finished product. Because of that, materials such as
coconut flour, fruits, sugar, salt, butter, and other ingredients in creating the
doughnut would be classified as direct materials. These are the main ingredients in
making fruity doughnut coconut. Therefore, all main ingredients are direct materials
and the remaining raw materials such as decorations would be classified as indirect
materials.
b) Direct Labor
Direct labor is the compensation of employees or workers who physically
convert the raw materials into finished goods (Ballada, 2014). Therefore, salaries of
the chefs are included in the classification of direct labor. Even so, the salary of the
cleaner in the kitchen is classified as indirect labor while the salaries of the crews in
the store are selling expenses.

46

Since we are newly established business, we will not hire a professional or a

first class baker. Each employee need not be a professional baker to be part of the
kitchen. The company would shoulder the expenses for the seminars that they
needed to attend to have a skill and knowledge for the work. The salary of the head
baker of Php 9,600 a month would cover for the work he rendered in the business.
His duties in the work place are further elaborated in the next section.
The salaries of the assistant baker would also cover for their services
rendered and it amounted to Php 8,760. This amount is a little smaller to the salary
of the head baker because they are just an assistant in the kitchen. They take orders
from the head baker.
c) Manufacturing Overhead
Manufacturing overhead cost includes all manufacturing costs that cannot be
classified as direct materials or direct labor. The major classifications of
manufacturing overhead are indirect materials, indirect labor, and any other indirect
manufacturing costs (Ballada, 2014).
To discuss further, indirect materials of fruity doughnut coconut would be the
decorations, such as the chocolate, cinnamon, maple, and sprinkles. Its costs are not
conveniently and economically traceable to the finished product for the reason that it
is only decorations to make it look cute and appealing. However, this will also be
needed in the production of doughnuts to add more flavor to each of them. It might
not contribute as much as the direct materials but these decorations would make our
sales through the roof.

47

Indirect Labor is the opposite of direct labor whereas it is the compensation

of employees or workers who did not take part or physically be part of the
conversion of raw materials to finish product. As a result, the salary of the cleaner in
the kitchen is an indirect labor. Additionally, his salary is on minimum wage since he
has the lowest position in the company and he only focuses on cleaning the place. By
such, it does not require any skills or knowledge.
Lastly, other manufacturing costs such as expenses for cooking gas, electricity
expenses in the kitchen, depreciation for fixed assets, and water expenses are included
in the computation of cost of production. We need to account for those expenses
because we need those utilities in the production process. Without those, we are not
capable of turning raw materials to finished goods.
L. Plant Organization
The business contains employees of different ranks and roles. To start with, a head
baker will serves as the highest position in the kitchen. On the other hand, He will work
all around and is in charge in assigning task to the assistant baker. He also checks all the
work of each employee. He works more on the glazing station because each doughnut
needs to be presentable and appealing to the costumer. It would be best to put the most
skilled and knowledgeable worker in that station and to supervise the assistant baker.
There would also be an assistant baker to help the senior chef in creating a master piece.
They could measure, mix, shape, decorate and arrange. In short, they have certain
knowledge about the work but their task depends on the orders of the head baker. Lastly,
the lowest position in the kitchen would be the cleaner. He serves as the overall cleaner
and the dishwasher in the kitchen.

48

As for the employees in the store, we need 2 crews to work all around. Each
employee in the store shares the same work and knowledge. They could be the cashier,
the waiter, and the cleaner at the same time and they need to help each other to maximize
the working time. Just to make things clear, one of the crew will act as a supervisor for
that day and reports to the manager.
In relation to their salary range, Php 400 per day for the head bakers salary and
Php 365 per day for each assistant baker and crew. The salary of the kitchen cleaner is at
the minimum wage of Php 267 per day. This minimum wages are based on the minimum
wage order no. IVA-16, setting the new minimum wage and providing advisory
guidelines on productivity based pay for private establishments in region IVA
(Department of Labor and Employement, n.d.). The salary of each employee will change
over time and in relation to the growth of the business.
To fully understand the relationship of each employee, a diagram is provided
below (Figure 21. Plant Organization).

Figure 21. Plant Organization

49

FINANCIAL STUDY
A. Presentation of Major Assumptions
To be able to formulate financial forecasts, assumptions were made on certain
business practices that will be adapted in running the proposed project.
a. Credit terms and extensions
Since our target market is students, we see no reason to add credit payment as
an alternative method of paying and since the price of our product will only be sold
for a small denomination.
b. Bad debts allocation and write-offs
Bad debts could only arise due to money loaned to employees. However we
will take measures if an employee is worthy to grant such request. A condition will be
given by reducing a certain percentage on his or her salary until such time, the debt
has been paid, incurring no interest.
c. Quality related costs
In order to meet quality products, prevention, inspection, internal and external
failure costs will be incurred. Prevention costs will be in the form of testing out the
baking tools needed to ensure smooth flow of production. Inspection costs will have
more weight since this will involve supplies. Supplies has a big contribution in giving
quality products. We will scout for the efficient supplier that we could find. The
owners will also oversee the production. The freshness of the doughnut is really
important since it can alter the taste. Making sure that we will produce enough
batches for a day to avoid left-over will prevent internal failure costs.

50

d. Sales returns, allowances and discounts

For the opening of our business we will offer a one day discount promo.
Discounts will be given occasionally, using social networking sites as platform for
disseminating such promos. Since we will be in the food industry strict food
compliances must be practiced. Returning or refunding of the product will only be
entertained only if there was a mistake in our part or if it has not been consumed and
returned untouched.
e. Labor and management compensation
Business will run 6 days a week. There will be a day given to every employee
in a week for their rest day. They will work for eight hours per day, and compensation
varies for every position. We have decided that we will not grant any fringe benefits.
Meals or transportation will be shouldered by the employee. A total of 5 employees
must be working everyday which will sum up an amount of Php 47450 of gross salary
per month. Since we will have a new business and employing not more than 10
workers, we will be exempted from paying the minimum wage as issued by the
National Wages and Productivity Commission (NWPC)
f. Method of depreciation and amortization
The straight-line method will be used to depreciate the fixed assets so as to not
complicate things. This is the preferred method of many since its simplicity reduces
error. Under the straight-line method, depreciation expense will be evenly d2stributed
over the estimated useful life of the asset (Straight Line Depreciation, n.d.).

51

Depreciation is computed on a straight-line basis over the estimated useful

life of the fixed assets as follows:
Table 12. Estimated useful life
Fixed Assets
Display cases
Furniture and fixtures

Estimated Useful Life (In years)

11
10

Ovens
Air cooler
Refrigerator
Electric mixer

15
12
11
15

B. Summary of the project cost

Fixed assets
Fixed assets, or what many calls as Property, Plant and Equipment are tangible
items, held for more than a year that is used for generating profits, renting and
administrative purposes. For our business, a capital threshold of not less than Php
15,000.00 as monetary value and an estimated life of at least 2 years will be used as an
additional factor in recognizing fixed assets. The use of capital threshold is a practical
way of small business to avoid overstated assets and possibly paying bigger taxes. Assets
that will not be able to meet the threshold will be expensed.
The ovens and the mixer will be purchased from Baketech, a supplier of baking
needs at an affordable price. They charge Php 1,500 for the shipping fee regardless of the
quantity bought. The shipping was divided equally, incurring Php 750 on three
equipment. While the rest of the baking equipment were searched on Lazada that
guarantees free shipping. The second-hand motorcycle comes from a seller in OLX.
Table 13. Costs of fixed assets

52

Display cases
Furniture and fixtures
Ovens
Air cooler
Refrigerator
Mixer
Total fixed assets

Php 70,000
69,975
50,750
31,099
27,894
35,750
Php 285,468

Current assets
Table 14. Inventory investments
Ingredients
Freight
Cost of Inventory

Php 196,431.36
1,000
Php 197,431.36

Cash credits
As stated before, our project location will only rent a commercial space and
therefore, site modifications will be needed to reflect the desired look of the business. We
will hire three workers with sufficient skills for paint job, sink and fixtures installations
and partitioning. Since the place is small, modifications will be probably be finished in
less than a month. An amount of Php 1,500 will be given to the artist as commission for
decorating the walls which is estimated to take up in a week. An allowance of Php 9,000
will be set aside for the carpenters and Php 5,000 for the materials needed to install
fixtures. Rent will be paid in advance that will be good for the first three months.
Although baking utensils could pass of as fixed assets, it is too minor to consider
it one and would be too impractical to depreciate it. Thus, the account is expensed rather
than capitalized.
Table 15. Cash credits
Pre-paid Rent
Operating Salaries
Site Modifications
Office Supplies

Php 40,500
42,298
15,500
350
53

Transportation
Unforeseen Cost
Advertising Expense
Utilities Expense
Baking utensils
Miscellaneous Expense
Total Cash Credits

1,000
10,000
2,000
24,170
21,000
1,300
Php 157,118

Organization Expenses
Table 16. Organization Expense
Sec Registration
Brgy. Clearance
CTC
Notarizing AOI and Affidavit
Special Books
COR and TIN
Business name registration
FAD Registration
Total Organization Expense

Php 2,631
500
500
500
470
115
40
2,500
Php 16,331

Table 17. Total Current Assets

Inventory investment
Cash Credit
Organization Expenses
Total Current Assets

Php 197,431.36
176,068.00
16,331.00
Php 370,880.82

Total Current Assets

Multiply by
Working Capital
Fixed Assets
Total Project Cost

Php 370,880.82
2
Php 741,761.64
285,468
Php 1,027,230

C. Sources of funding the project

Assuming that the three of us can only cover 15% of the cost through selffunding, other sources will have to cover the remaining Php 877,209. Due to the fact that
we cannot fully provide the amount to start organically, the business will be established
as a closed corporation. We have people in mind that we hope will be able to invest in the
54

business. This is a great way of filling the missing amount without having to borrow from
the bank and pay for the interest, and we will still able to able to retain control in running
business. However, it is probable of still having insufficient funds despite setting up a
closed corporation. Thus, we will have to borrow from a bank. A lot of banks have a
wide-array of loans from short to long term, but we think that it would be best to stick
with one bank for both routes to fasten the granting process. Only BPI Family KaNegosyo will be the chosen bank for their plans are best suited for starting business like
us. Their loans are ideal for short-term borrowing and their term loan for long-term. In
addition, a savings account will be established, coming from the SME plan. Loans can be
paid up to 3 years and has an interest rate of 14% per annum.
We also taught of borrowing funds from PSBank as an alternative route since they
are known for fast approval of loans with small interest rate. Their term loan would be
great for long-term borrowing and one great feature of it is that it has rebate for advance
payments.

55

D. Financial Statements
FDC CORP.
Projected Income statement
For the year ended Dec. 31, 2016- Dec. 31, 2018

56

FDC CORP.
Projected Financial Position
As of Dec. 31, 2016- Dec. 31, 2018

57

58

FDC CORP.
Projected Cash flow
For the year ended Dec. 31, 2016- Dec. 31, 2018

59

60

E. Financial Analysis

61

F. Decision Criteria
Payback Period

62

Net Present Value

NPV= (Php 1,027,230) + 1,057,974/1.11 + 1,040,540/1.112 + 1,289,534/1.113

Internal Rate of Return= 91%

A. Sensitivity Analysis

63

H. Analysis of with and without a project

We being the youth of today and the hope of the next generation must accept the
fact that we have the responsibilities to always change things for the better in order for us
to have a much better future, better than what we have today. We strongly believed that

64

this idea must also impose on our food products. In doing so, we have developed a
product in which we believed that this is the donut for the future. Because, our product is
a better version of what we have on the market today.
Without this project, we will still be stuck in the unhealthy concept of doughnuts
as a snack. We will still be using artificial flavorings in every doughnut and risking our
lives in the danger that was tag along with the artificial flavorings. All other sectors
relating to the food industry and the economy would remain the same without this
project.
With this project, we will recreate the concept and create a healthy snack as an
alternative for the current regular doughnut. And with this project, we are helping the
economy, the employee, the owners of the business, and the government. This business
would contribute to the economic growth though it is only on a small scale. The
employee would benefit in this project through their monthly salary. As for the owners of
the business, they will benefit as long as this business is on-going and its profitability
continues to increase. For the government, it will benefit through the growth of the
economy and taxes from the business and the employees compensation. Mostly, this
project will help the people of tomorrow.

65

SOCIO-ECONOMIC STUDY
A. Socio-economic benefits in terms of:
Employment and income
FDC Corporation will be able to hire qualified employees when the Fruity
Doughnut Coconut store was established. The generation of employments, even by small
businesses, can help economic growth though only on a small scale. Formerly
unemployed or underemployed people can have more budget through their incomes and
thus have more budget to spend on products. This can help to increase consumer
spending on the community that can help other businesses.
So, if FDC Corporation establishes the business, it would then generate
employments, and the employments will generate income for the employees, giving
formerly underemployed or underemployed people jobs that would give them the ability
to spend more and therefore, increases consumer spending in the area where it will be
established. The money circulating in the economy will be increased even at a small
scale. This would result to a better and increased economy and it would allow to for more
business to appear. Overall, as generation income will help the economy, it would also
personally help the people FDC Corporation will hire as they will have increased money
to save, to spend, or to pay for their liabilities.
Taxes
Establishment of a business like FDC Corporation also ensures the payment of
taxes to the government. Filipinos have a bad connotation when it comes to taxes. It is
known that the Philippines have the highest tax rate in Southeast Asia. Php 500, 000
income on Philippines is taxed at 32% compared to other Southeast Asian countries like

66

Malaysia and Thailand (10%), Indonesia and Myanmar (15%), Laos (24), etc. for the
same amount of income. Though tax is a burden to most employees, it can, actually, have
a benefit to the country and its economy, and in return, a benefit to all Filipinos. The main
purpose of tax is add to the governments budget, that will provide hospitals, build
establishments, provide for jobs and build anything that the government sees fit for the
peoples needs. By the payment of taxes by the FDC Corporation, it will contribute to the
governments budget that helps all Filipinos. Though this contribution is only at a small
scale, it still shouldnt be ignored as it is still part of that whole agenda.
Taxes can also affect the behavior of households by the so called income effect
and substitution effect. The income effect is inversely related by means that when the tax
became higher, the households budget becomes lower resulting to the household to
become poorer and to act like that. In substitution effect, the government relies on
predictable actions by the household based on observation. If the government will levy
the tax based on the households action, then these taxes will increase the price of a
certain product that is related to the households action. Due to this increase in price, the
household will then change its predictable actions (The effect of taxation, n.d.)
Supply of Commodities
Mainly, FDC Corporation promotes a healthy snack through the development of
its product, Fruity Doughnut Coconut. The supply of such healthy snack has great
benefits to the community. First, the existence of FDC can result to people in the
community buying healthy food whether they want it or not. For the reasons that FDC is
delicious, affordable, and easy to find, customers would definitely buy this product. For
the main target which is the students, it will help them to have a healthy snack which

67

their bodies needed for them to function properly in school. The refreshing taste of FDC
can replenish or add to their energy which they undoubtedly need. The only consequence
in this is that they will have a delectable treat whilst eating something healthy. Aside from
this social benefit, supply of the product will also help the countrys economy. As the
supply of FDC increases, it is assumed that the price of doughnuts will decrease
overtime.
Demand for materials
In able for FDC to function as a business, like any other business, it will need to
buy materials necessary to produce the product. The demand for Fruity Doughnut
Coconuts materials can be beneficial to the economy because it can contribute in the
circulation of market in certain materials like flour, milk, and fruits. This would also help
in the ongoing cycle of the economy of buying and selling, as would any business
whether big or small. When FDC Corporation demanded for materials to use for its
production, it would help the economy, even on small scale, as it would also set in motion
the principle of consumer spending.
For the reason that FDC Corporation decided to use coconut flour in the making
of the dough for the doughnut, this would help the coconut industry in the Philippines.
The Philippine production of coconut in 2014 reached 14 million tons, just second to
Indonesia. According to the Regional Board of Investment of Autonomous Region in
Muslim Mindanao, there are 12 million hectare of farmlands in the Philippines, and with
this, 3.25 million hectares are solely allotted to coconut trees. It also said that about 87%
of provinces have coconut areas. It is obvious that the coconut industry is one of the
major industries of the Philippines. However, with this big production, only 20% of the

68

coconut products produced actually go to the Philippines, because 80% of it went to

different countries abroad (Coconut Industry, n.d.). The establishment of FDC will
contribute to the coconut industry of the Philippines. The percentage of coconut products
produced that go to the Philippines can be increased, and an increased demand can be
beneficial to coconut farms to have more revenue.

69

ORGANIZATION & MANAGEMENT STUDY

A. Formulation of Goals and Objectives
The company strongly believes that food needs to be nutritious, healthy, delicious
and affordable as well. In the age of artificial flavoring in todays food market we all
knew that most of the foods produce are all using artificial flavors. Thus, these artificial
flavorings are harmful to our health. As the results of continuous studies, it can give us
serious sickness and at some degree, these artificial flavorings could give us cancer. In
view of this situation our company would like to introduce to the Filipino market a
different variation of foods that will use all natural ingredients in hoping to improve the
wellness of the consumers and the awareness of the Filipino people in the danger of
consuming artificial food flavorings.
In doing so our company is looking forward for a much healthier and wiser Filipino.
B. Basic Considerations
Basic considerations in creating a business would be the type of business, form of
ownership, 5 main characteristics of a corporation, advantages and disadvantages of the
form of ownership, organization structure, and dividends of the shareholders.
The type of business would be manufacturing. Manufacturing business is any
business that uses components, parts or raw materials to make a finished good (Hill,
2016). We are going to manufacture raw materials to create a new nutritious snack, fruity
doughnut coconut. Form of ownership is corporation. Corporation is a business owned by
its shareholders (Ballada, 2013).

70

Five main characteristics of a corporation (Adams, n.d.):

1. Limited Liability
Stockholders or the shareholders are not liable to any debts or acts.
2. Perpetual Life
Corporation exists indefinitely and has endless life. There is no connection
between the life of the corporation and its owners.
3. Transferability of Ownership
Shares of corporation are transferable. By such, the ownership changes
hands. Also, transfer transactions do not interfere with the operations of the
corporation. Each share has a share certificate that represents a legal title to
ownership.
4. Capacity to Contract
Corporations have full legal capacity to enter into contractual agreements
on their own behalf.
5. Centralized management
The owners do not manage the day-to-day operations of the corporation;
instead, the corporation has appointed managers and board of directors.
Advantages of a corporation (Ballada, 2014):
1. It has the legal capacity to act as a legal entity.
2. Owners have limited liability.
3. It has continuity of existence.
4. Ownership can be transferred without the consent of the other shareholders.
5. Its management is centralized in the board of directors.

71

6. Shareholders are not general agents of the business.

7. It has a greater ability to acquire funds.
8. Corporation file taxes separately from the owners.
Disadvantages of a corporation (Ballada, 2014):
1. It is relatively complicated in formation and management
2. There is a greater degree
3. It requires a relatively high cost of formation and operation
4. It is subject to heavier taxation than other forms
5. Minority shareholders are subservient to the wishes of the majority.
6. Transferability of shares permits the uniting of incompatible and conflicting
elements in one venture.
7. Double taxation. Corporations are taxed twice first, when the company
makes profit, and again when the dividends are paid to the shareholders.
It has the same organizational structure as a regular corporation. FDC Corporation
has its shareholders and board of directors. There are many kinds of dividends, such as
cash dividend, property dividend, share dividend, and liquidating dividend, to be used in
distributing a portion to each shareholder. The declaration and payment of dividends
depends on the decision of the board members.
C. Form of Ownership
There are many known forms of ownership such as sole proprietorship,
partnership, and corporation. Sole proprietorship is an unincorporated business that was
owned by one owner who pays personal income tax on profits from the business (Sole
Proprietorship, 2016). Otherwise, partnership is the relationship existing between two or

72

more persons who join to carry on a trade or business (Partnerships, 2016). Lastly,
corporation is an artificial being created by operation of law, having the right of
succession and the powers, attributes, and properties expressly authorized by law or
incident to its existence (The Corporation Code of the Philippines, Sec. 2).
By taking account of all the attributes of the ownerships, we have chosen
corporation as the form of our business. Since this is an artificial being, the corporation
has separate personality and apart from its individual shareholders or member. Which
means any action and debts that the business incurs, shareholders are not held liable
(Corporation, n.d.). Unlike corporation, the liability of the partnership extends to the
partners personal assets up until the debt is fully paid and it can only come into existence
by mere agreement of the parties (Ballada, 2014). On the other hand, corporation is
formed by the special authority or grant from the state. Each corporation has the capacity
to continue its existence subject to the period stated in the Articles of Incorporation and
subject for extension. However, partnership existence is only for the period of time
stipulated by the partners (Ballada, 2014). Additionally, partnership can easily dissolve by
death, withdrawal, insolvency or incapacity, and the transfer of ownership by a partner. In
the contrary, these things would not result to the dissolution of the corporation.
It would be easy for us to acquire funds and generate assets from those
investments. This form of ownership is easy to manage for its centralized management in
the board of directors. For starters, corporation would be the best choice as a form of
ownership due to its limited liability and indefinite or endless life. Therefore, the
liabilities of the owners are only to the extent of their shares.

73

We have listed basic considerations in the previews section to be taken account of

and merely the reasons why we have decided to form a corporation instead of sole
proprietorship and partnership. Besides, it would be more practical to choose corporation
as our form of ownership rather than partnership.
D. Organizational Chart
Below is a chart for all the officers and key personnel of the corporation and the
relationship of each other. The chart also portrays the hierarchy of the management team
or the officers.

Figure 22. Organizational Chart

74

E. Officers and Key Personnel

Officers and key personnel govern the whole business and set the policies and
procedures to the business. Because of them and their managing skills, the business
continues to grow. They are all responsible for developing each staff, organizing salary
payments, health, safety and welfare of each employee, and monitoring staff and
performance.
To briefly explain the role of every officer in the business, we give further details
of their responsibility and duties. Starting with the shareholders, Shareholder is an
individual, group, or organization that owns one or more shares in a company, and whose
names appear in the certificate of stocks (Shareholder, 2016). They basically are the
investors and owners of the corporation. As for the board of directors, they are
responsible for the formulation of the policies for the corporation and for the exercise of
corporate powers (Ballada, 2014). They oversee all the business activities. For our
business, the head baker and supervisor will report to the board of directors for the reason
that this company is a close corporation. The head baker is the highest position in the
kitchen portion of the business. He serves as the supervisor in the kitchen and he
designates task to the assistant baker. As for the store personnel, the supervisor will report
to the manager with regards to all the information in the store. However, the work of the
supervisor does not end in only supervising the work of each employee but also to review
the needs of the employees. He is the one who is responsible to ensure that other
employees follow the policies and procedures (McNamara, n.d.).

75

F. Project Schedule
Instead of elaborating the project activities through words, we provided figures
for better understanding and to be well-detailed. In addition, we assumed that after
conducting this study, they will pursue and establish this business. Therefore, the dates
used in the given figures are for this current year.

Figure 23. Project Activities and Dates

76

Figure 24. Gantt chart for Project Schedule

To sum it all, the whole project would took for about 3 months including the
market study to gathering investors to filling all necessary documents to fixing the whole
place for the production of fruity doughnut coconut to be fully operational.

77

CONCLUSION AND RECOMMENDATIONS

Market study. Our target market for the business is students, MCL students to be
exact. The place of the proposed business will best suit targeted sales since donuts are
desserts that are usually eaten after a meal. It is just fortunate that Saucy, one of the most
popular store frequented by MCL students is also established in the same building. Upon
studying our target market, the students of Malayan Colleges Laguna, we found out that
91% of the population purchases donuts. From that percentage, we developed an annual
demand for doughnuts and a projected demand per year that was patterned with the
population of MCL students dating back to 2011 until recent. Also, upon studying the
prices of doughnuts from different doughnut shops, we noticed that there are not much
fluctuations when it comes to prices of these product. Therefore, to establish a
competitive price for fruity doughnut coconut that will also cover the production cost, it
has been decided that its selling price would be Php 32. We came up with that price by
considering the basics like the production costs and other expenses that will occur. With
that price, our product is affordable and in line with the competitors. In addition, to make
them more satisfied, the company decided to cut 20% to its listed price when nighttime
falls to assure customers of the freshness of the product.
Technical study. We considered the plant capacity and the factors affecting the
production. A table is provided in the technical study section to show comparison
between the minimum and maximum production. However, we only use the maximum
number of batches and maximum number of doughnuts per day for the computation of
the product cost for the reason that it will be the limitation or the maximum that the
company can produce. Another reason would be we can go beyond or below the

78

minimum number but we cannot go beyond the maximum number. It will be hard for us
to compute the product cost if we used the minimum number of production. We will also
need to renovate and redesign the place for it to be more convenient and be able to fit
with the business activities. Also, a number of machineries and equipment are needed for
the production process and the selling of our product. In addition, from the technical
study, we found out that all materials are available in supermarkets and in public market.
Therefore, it will be easy for us to find a supplier of all the ingredients. As for the waste
disposal, all recyclables will be sold in the junkshop and all the biodegradable will be
sold as animal feeds or might as well will undergo composting.
Financial study. We considered factors like credit terms and extensions, bad debts
allocation and write-offs, quality related costs, Sales return, allowances and discounts,
labor and management compensation, method of depreciation are used to formulate
financial forecasts. Quality cost is needed to ensure the smooth flow of production and
the quality of each doughnut. As for the discounts, it will be given occasionally, using
social networking sites as platform for disseminating such promos. As for the labor and
management compensation, the business will run 6 days a week and 8 hours a day. Their
compensation varies on their position. Additionally, we will use the straight line method
in computing the depreciation expenses. A capital threshold of not less that Php 15,000
and an estimated life of at least 2 years has been added as additional requirement to
recognize fixed assets. As for the sources of funding the project, we assume that the three
of us can cover 15% of the cost through self-funding and the remaining cost will be from
other sources like borrowing from a bank and establishing a closed corporation.
Various ratios has been given and obviously shows that the project will be very profitable

79

Socio-economic study. Socio-economic benefits in terms of employment and

income, taxes, supply of commodities, and demand for materials. If FDC Corporation
establishes the business, it would then generate employment, and it will generate income
for the employees, giving formerly underemployed or underemployed people jobs that
would give them the ability to spend more and therefore, increases consumer spending in
the area where it will be established. The money circulating in the economy will be
increase even at a small scale. Also, Filipinos have a bad connotation when it comes to
taxes. Though tax is a burden to most employees, it can, actually, have a benefit to the
country and its economy, and in return, a benefit to all Filipinos. For the supply of
commodities, FDC Corporation promotes a healthy snack through the development of its
product, Fruity Doughnut Coconut. The supply of such healthy snack has great benefits
to the community because the existence of FDC can result to people in the community
buying healthy food whether they want it or not. Lastly, the demand for Fruity Doughnut
Coconuts materials can be beneficial to the economy because it can contribute in the
circulation of market in certain materials like flour, milk, and fruits. This would also help
in the ongoing cycle of the economy of buying and selling, as would any business
whether big or small.
Organization and Management study. We formulated goals and objectives that
will both help the consumer and the economy. We helped the consumers by providing a
nutritious, healthy, delicious, and affordable snack and by improving their wellness and
raising awareness towards the danger of consuming artificial food flavorings. Thus, we
are helping the economy by helping the local farmers to increase their income and the
demand for their product. We also indicated some basic consideration in creating a

80

business. We considered the type of business, form of ownership, 5 main characteristics

of a corporation, advantages and disadvantages of the form of ownership, organization
structure, and dividends of the shareholders. As for the officers and key personnel, there
would be the shareholders, board of directors, head baker, supervisor, assistant baker,
bakery cleaner, and the store crew. Their salary range varies and their duties and
responsibilities also differ on their position. We also provided a Gantt chart for the project
schedule of all the activities.
Conclusion and Recommendation. According to the research and study that we
have accompanied, we therefore conclude that our business is feasible and viable in the
market. After assessing the significant factors in the study that we showed, such factors
like marketing, technical, financial, management and socio-economic study, it is therefore
suggested that FDC Corporation will be pursued and the business to establish at RLI
Building 3 in Pulo, Cabuyao.

81

REFERENCES
Cespedes, A. (April 15, 2015). What are the health benefits of Coconut Flour? Retrieved
from http://www.livestrong.com/article/28183-health-benefits-coconut-flour/
Coconut Industry. (n.d.). Retrieved from
http://rboi.armm.gov.ph/uploads/DOC_FILES/CoconutIndustry.pdf
Culliney, K. (February 11, 2013). Kitchen and snacks. Retrieved from
http://www.kitchenandsnacks.com/Processing-Packaging/Emerging-technologiesoffer-promise-for-energy-efficiency-says-American-Bakers-Association
Dunkin Donuts (n.d.). Retrieved from https://www.zomato.com/manila/dunkin-donutsortigas-quezon-city/menu#tabtop
Famous Belgian Waffles (n.d.). Retrieved from https://www.zomato.com/manila/famousbelgian-waffles-calumpang-marikina-city
Filipino consumers love a good snack. (2014). Retrieved from
http://www.nielsen.com/ph/en/insights/reports/2014/filipino-consumers-love-agood-snack.html
Finance, M.D. (2015). The Philippines has the highest tax rates in Southeast Asia but
the quality of government services is one of the regions worst [Blog Post].
Retrieved from https://thefinancemd.com/2015/09/04/the-philippines-has-thehighest-tax-rate-in-southeast-asia/
Food for teenagers. (n.d.). Retrieved from
http://raisingchildren.net.au/articles/food_teenagers.html
GoNuts Donuts prices. (n.d.). Retrieved from http://www.munchpunch.com/gonutsdonuts-sm-makati/menu

82

Gregory, S. (n.d.). The use of technology in a kitchen. Retrieved from

http://www.useoftechnology.com/technology-kitchen/
Guerrero, A. (2013). Sweet competition in cupcakes. Inquirer. Retrieved from
http://business.inquirer.net/129559/sweet-competition-on-cupcakes
Happy Haus Donuts prices. (n.d.). Retrieved from http://www.munchpunch.com/happyhaus-donut-lrt-station/menu
Inflation. (n.d.). Retrieved from http://www.investopedia.com/terms/i/inflation.asp
J. Co Donuts & Coffee (n.d.). Retrieved from https://www.zomato.com/manila/j-codonuts-coffee-sm-city-north-edsa-quezon-city/menu#tabtop
Krispy Kreme (n.d.). Retrieved from https://www.zomato.com/manila/krispy-kremecubao-quezon-city/menu
Lister, J. (n.d.). How does hiring additional employee affect the economy? Chron.
Retrieved from http://smallbusiness.chron.com/hiring-additional-employeesaffect-economy-31964.html
Martinez, T. (n.d.). Coffee and Food: Three Best Pairing. Retrieved from
http://www.brewed-coffee.com/tips/coffee-and-food-three-best-pairings/
Mister Donut prices. (n.d.). Retrieved from http://www.munchpunch.com/mister-donutsm-city-fairview/menu
PSA: Inflation Rate. (2016). CNN Philippines. Retrived from
http://cnnphilippines.com/business/2016/01/05/inflation-rate-2015.html
Schrder, M. (2003). Food quality and consumer value: Delivering foods that satisfy. NY,
USA: Springer-Verlag Berlin Heidelberg. Retreived from
https://books.google.com.ph/books?

83

id=NnkFCAAAQBAJ&pg=PT205&lpg=PT205&dq=the+importance+of+appeara
nce+in+desserts&source=bl&ots=NQpZbVSv1f&sig=XJ1eBy0UwsOKYiKp1j0EdctPjY&hl=en&sa=X&ved=0ahUKEwj3kzW_8LMAhUGJZQKHVFEBicQ6AEIRTAH#v=onepage&q=the%20importance
%20of%20appearance%20in%20desserts&f=false
The effect of taxation. (n.d.). Retrieved from
http://faculty.wcas.northwestern.edu/~mdo738/textbook/dls_ch13.pdf
What do Filipinos spend their money on? (n.d.). Retrived from
http://www.quickloan.com.ph/articles/filipinos-spend-money/

84

APPENDICES
Appendix A. Plant Layout/Equipment

Figure 25. Plant Layout

Legend:
Fire Extinguisher (Placed on the wall)
Chairs/Couch
Large Trash Bins

85

Average Size Trash Bins

Rack for used and unused glass
Table

Desktop
Door
Usage of equipment and machineries in production of doughnuts:
1. Newly delivered ingredients where store in the Stock Cabinet up until
those raw materials are need for production.
2. Raw Materials would be measured and prepared for production in the
Measuring station.
3. All measured ingredients will be directed to the Mixing Station where
all the ingredients to be combined and became a dough.
4. After creating the dough, it needs to ferment and that why it is stored
in the cooling rack for a couple of hours.
5. Once the dough is fermented, it is transferred to the table in the middle
for shaping. And it will be left for another 30 minutes for proofing
6. The next step would be baking. These doughnuts would be put into the
oven for 15 minutes in 375 degrees Fahrenheit or almost 200 degrees
Celsius.
7. These newly baked doughnuts will be cooled for 5 minutes in the
table.
8. When it is cool enough, it will proceed to the glazing station.
86

9. Glazed doughnuts are put back to the table to let it dry for a while.
10. When the doughnuts are dry, it will be stored in the refrigerator and are
ready for consumption.
11. If a certain flavor of doughnuts runs out in the display cabinet, an
employee will quickly restock this by getting the supply in the
refrigerator.
Appendix B. Equipment Flow Sheet

Figure 26. Flow of Equipment in Production

As you can see in Figure 26. Flow of Equipment in Production, we indicated all
necessary machines and equipment that our business have and use in every process in
creating doughnuts. This diagram helps the reader to picture all the machineries and tools
to be used by every station during working hours of the business.

87

Appendix C. Equipment Listing and Cost

Table 18. Oven Specifications (Baketech, 2016)
Triple-layer six-tray gas oven
Condition
New
Power Source
Gas
Weight
320 kilograms
Trays size (mm)
400 x 600
Specification
12 trays, 2 decks & 4 trays, 2 decks
Dimension (L x W x H)
1320 x 920 x 1740mm
Internal Size (mm)
870 x 640 x 220
Production Capacity (KG/h)
360
Type
Stationary gas oven
Power (W)
2.8
Warranty
2 years
Material
Stainless steel
Temperature Range (in Celsius)
300
Product Price
Php 40,350 & 10,350
Table 19. Spiral Mixer (Baketech, 2016)
Dough Mixer
Condition
New
Power Source
Electric
Weight
8 Kilograms
Bowl Volume
20 Liter
Maxing Kneading Capacity
8 Kilogram
Place of Origin
Guangdong, China
Usage
Flour
Voltage
220
Dimension (L x W x H)
690 x 380 x 730mm
Mix Speed
202r/min
Product Price
Php 35,750
Table 20. Display Cabinets (Kitchen Display Cabinet Refrigerator, 2016)
Display Cabinet
Condition
New
Power Source
Electric
Certification
CE
Humidity
80% inside
Style
Double-temperature
Size
2 Layers
Dimension (L x W x H)
1800 x 650 x 1250mm
88

Type
Power (W)
Material
Temperature Range (in Celsius)
Product Price

Display Cooler
760
Glass
2 to 8
Php 70,000

Table 21. Kitchen Refrigerator (Lazada, 2016)

Kitchen Refrigerator
Condition
New
Power Source
Electric
Certification
CE
Rated Power
230V/60Hz
Brand Name
Sharp
Product Price
Php 27,894

Table 22. Desktop Compute Stick (Desktop Compute Stick Package, 2016)
Desktop Compute Stick
Processor Type
Intel
Display Size
18.5
Size (L x W x H)
39 x 14 x 113mm
Product Warranty
1 year warranty
Weight
0.2kg
Capacity
32Gb
Ram
2Gb
Components
Intelistick, Wireless keyboard and mouse,
Monitor, and User manual
Operating System
Windows 10 Home SL and Android 4.4
CPU (type + speed)
Intel Atom Z3735F 1.33GHz Processor
Graphics
Intel HD Graphics
Input Device
Wireless keyboard and mouse
Price (in peso)
8,999

Appendix D. Utilities Calculation

Telephone Expense: (Monthly)
Initial Plan
Allowance for calls to mobile

Php 600
400

89

Total

Php 1,000

Expense for Cooking Gas: (Monthly)

Price (per Tank)
Number of Tanks per month
Total

Php 2,585
x
2
Php 5,170

Water Expenses: (Monthly)

Allowance for water expenses
Add: Drinking Water Expenses (Per 5gallons)
Number of gallons per month
Total

Php 1,000
Php 40
25

1,000
Php 2,000

Rent Expense: (Monthly)

Allowance for Rent Expense

Php 13,500

Electricity Expense: (Monthly)

Allowance for Electricity Expense

Php 15,000

Computation for Total Utility Expense: (Monthly)

Telephone Expense
Expense for Cooking Gas
Water Expenses
Rent Expenses
Electricity Expenses
Total

Php 1,000
5,170
2,000
13,500
15,000
Php 36,670

Appendix E. Plant Facilities Breakdown of Cost

Since we will only rent a place, we need to refurbish it to fit all the business
needs. By such, we would hire a contractor to renovate and redesign the space rented in
RLI bldg. 3, Pulo-Diezmo Road, Cabuyao, Laguna according to the projected plan and
design. Specifically, the contractors need to divide the location base on the plant layout,
paint the whole establishment, and properly install every lights and electric circuits.
However, we cannot give definite figures for the expenses, so we established an
allowance or a budget as a replacement for it.
90

Budget Allocated to Contractors

Php 100,000

Details about the building and facilities are discussed on Technical Study, Section
G. Building and Facilities. Plant layout is already illustrated in Appendix A. Plant
Layout/Equipment and discussed on Technical Study, Section F. Plant Layout.
Appendix F. Projected Cost of Production
The following cost is on a monthly basis.
Direct Materials:
Raw Materials:
Coconut
Fruits
Dry Yeast
Milk
Egg Yolk
Caster Sugar
Table Salt
Unsalted Butter
Total Direct Material Cost
Direct Labor:
Head Baker Salary
Assistant Baker Salaries
Total Direct Labor Cost
Manufacturing Overhead:
Indirect Materials:
Chocolate Buttons
Chocolate Block White
Chocolate Block Semi-sweet
Cinnamon Powder
Maple Syrup
Sprinkles
Indirect Labor:
Kitchen Cleaner Salary
Other Manufacturing Cost
Cooking Gas
Kitchen Electricity Expense

91

Php 17,280.00
19,200.00
4,815.36
38,304.00
20,736.00
2,895.36
65.28
24,806.40
Php 128,102.40
9,600.00
8,760.00
18,360.00

13,747.20
9,945.60
8,755.20
11,116.80
14,588.16
10,176.00
6,408.00
5,170.00
10,000.00

Depreciation fixed asset

Water Expenses
Total Manufacturing Cost
Operating Cost:
Selling Expenses:
Store Crew Salaries
Store Electricity Expense
Water Expenses Drinking Water
Administrative Expenses:
Rent Expense
Telephone Expense
Total Operating Cost
Total Cost of Production

24, 255.20
1,000.00
115,162.16

17,520.00
5,000.00
1,000.00
13,500.00
1,000.00
38,020.00
Php 299,644.56

Quality Cost:
Prevention Cost
Appraisal Cost
Internal Failure Cost
External Failure Cost
Total Quality Cost

Php 15,000.00
20,0000.00
10,000.00
20,000.00
Php 65,000.00

Appendix F. Projected Cost of Production only requires the breakdown and total
cost of production and did not require any breakdown of quality cost. However, we still
included some quality cost in this section but we did not include it in the computation of
projected monthly cost of production and the computation of product cost.
By using the total cost of production and the maximum production per month, the
cost per product would be Php 21.68 per doughnut.
Total Cost of Production
Divide by: Maximum number of production per month
Cost per doughnut

Appendix G. Projected Cost per Batch

92

Php 299,644.56
13,824
Php 21.68

Each batch of doughnuts is composed of 12 doughnuts per tray and can occupy 6
trays for a total of 72 doughnuts. Volume and cost of ingredients per batch is listed in the
table below.
Table 25. Ingredients
Ingredients
Coconut for coconut flour
Dry Yeast
Milk
Egg Yolk
Caster Sugar
Table Salt
Unsalted butter
Chocolate Buttons
Chocolate Block White
Chocolate Block Semisweet
Cinnamon Powder
Maple Syrup
Sprinkles
Approximate cost for fruits
Total

List of Ingredients
Volume
6 coconuts
120g
1500mL
18 medium size
180g
15g
340g
200g
200g
200g
200g
200mL
200g
-----

93

Cost (Php)
90.00
25.08
199.50
108.00
15.08
0.34
129.20
71.60
51.80
45.60
57.90
75.98
53.00
100.00
Php 1,023.08