13C05 Economic Study

PAMANTASAN NG LUNGSOD NG MAYNILA
University of the City of Manila

College of Engineering and Technology
Department of Chemical Engineering
ECONOMI
C STUDY
INTRODUCTION
The economic study of GeoLith Incorporated determines the economic
feasibility of the project and to ensure that the plant design is operating
under conditions that yield a profit. Qualitative indicators such as net profit,
Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent
Economic
Bleaching Earth for the Production of Sodium Aluminosilicate 1
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R.C. Macasil, A.P.P. Redublo, A.C.Santos, C.I.V.Torres
rate of return, payout period, and breakeven point were determined and
evaluated. Moreover, the details of the significance of projection indices such
as the purchasing power of peso and compensation index for the cost
estimation of the project were included.
The data on the Purchasing Power of Peso (PPP) and compensation

index (CI) were collected from the Philippines Statistics Authority (PSA). The
historical data for PPP and CI were analyzed and projected up to year 2024,
which the company will start its operation. These projected values were used
to estimate the cost of the raw materials, equipment including its
installations, and labor during the start of the production process. The total
capital investment and total product cost were estimated based on the
calculated related costs that were collected from different manufacturers that
were based on common industrial setups. Both factors became the basis for
the determination of the price of the product, rate of return, breakeven point,
and pay-out period.
The company had analyzed the total manufacturing costs of the

proposed sodium aluminosilicate monolith production plant and the possible
revenues that the company can acquire. The project is considered to be
financially feasible if the potential revenues of the proposed project can cover
all of the related costs and all relevant economic requirements until the
target year with a remaining sound profit for its operation.

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OBJECTIVES OF THE ECONOMIC STUDY

General Objective
To determine the economic feasibility of manufacturing sodium

aluminosilicate monolith of GeoLith Incorporated.
Specific Objectives
 To determine the purchasing power of peso and index of compensation

for the next five years to estimate the costs for land and building in
2020, equipment and piping in 2022, depreciation, and labor in 2024.
 To calculate the total capital investment, total production cost, and

start-up expenses to determine the total money needed for the
establishment, erection, and operation of the company.
 To obtain a bank loan approval to justify the source of funding for the
company.
 To provide a financial statement of the company for the year 2024 that
includes the income statement, balance sheet, cashflow statement,
and discounted cashflow, to determine the ability of the business to
generate cash, and the capability to pay back its debts.
 To develop a profitability analysis by calculating the net profit, rate of

return (ROR), payout period, and breakeven point, to ensure that the
plant design is operating under conditions that yield a profit.

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Figure 13.1 Economic Study Framework

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ANALYSIS OF ECONOMIC STUDY FRAMEWORK

The economic study framework presented in Figure 13.1 shows the
different aspects to be considered in establishing the economic feasibility of
GeoLith Inc., including planning, company registration, construction of plant,
procurement, installation, start-up, production, sales, and financial feasibility
or profitability.
One of the most important part of economic study is planning stage,
wherein the company must accumulate a specific amount of money as
investment, from shareholders and bank loan. The land for plant construction
will be bought once the money is secured. Afterwards, the company
registration is done which covers the legal requirements for the
establishment of GeoLith, Inc., as well as the formation company profile and
organizational structure. Moreover, the plant construction includes the
erection of the buildings, the wastewater facility, the yard improvements, and
the service facilities. Costing for the engineering and supervisions,
contractor’s fee, construction expenses and contingencies are also included.
The procurement of the equipment, auxiliaries, piping, instrumentation, and
electrical materials are done after the plant construction followed by its
installation.
After installation, a start-up operation is executed for a month,
including the acquisition of raw materials and chemicals. Once the start-up is
done, the actual production is operated. The production consists of the
manufacturing costs, fixed charges, general expenses, and plant overhead
costs. The manufactured goods are advertised and marketed to potential
customers and their orders are taken. The sales and marketing department
are responsible for promoting the product and securing customers.
After a year of production, the financial status of the company is
evaluated, and the financial statements are submitted and reported to the
board of directors. This include the income statement, balance sheet,
cashflow statement, and discounted cashflow. Moreover, the profitability

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analysis are also presented which consists of the net profit, rate of return,
payout period, and break-even point.
BACKGROUND OF THE COMPANY
Before starting a company, there are several analysis to conduct to

estimate the total cost of the investment for the project for it to operate.
Aside from the costs, there are several requirements from the government
that needs to be accomplished.
Company Registration
A. Company Name Application
The company name should be reserved and registered in
Securities and Exchange Commission (SEC) Main Office located at
Secretariat Building, PICC Complex, Roxas Boulevard. The company
name is to be verified first before submitting other documents. The
requirements in applying for the company name are Cover Page,
Articles of Incorporation, Treasurer’s Affidavit, and By-laws of the
company. These documents shall be submitted notarized to the SEC
Office.
B. Mayor’s Business Permit

The business permit shall be applied and registered at Sta.
Teresita, Batangas Municipal Hall for the license to operate in the
municipality and payment of the local business taxes. These also
includes the seller’s permit for reselling wholesale merchandise and
zoning clearance permit for the acquired land.
C. BIR Registration
The BIR registration shall be applied at the Regional District
Office (RDO) of the area where the manufacturing plant is located for
the application of TIN and payment for the national internal revenue
taxes (Income tax, VAT, and withholding taxes.
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D. Patent
The application for a grant of Philippine Patent (for Invention)
was filed with the Bureau of Patents (BOP) of the Intellectual Property
Office (IPO) through the Receiving Section/Counter of the
Administrative, Financial and Human Resource Development Services
Bureau (AFHRDSB) located at the ground floor of the IPO Building.
E. Social Security System (SSS), PhilHealth, and HDMF/ PAG-IBIG

Fund Registration
The registration for Social Security System, PhilHealth and PAG-
IBIG Fund was done for the employee benefits of the company. GeoLith
Inc. applied as an employer. Also, this is done to remit the employee’s
contribution together with the employer’s share.
Form of Business Ownership

The legal structure of GeoLith Inc. is a general corporate ownership,
thus, a group of people is authorized to act as a single entity. This will enable
the company to access financing more easily than sole proprietorships by
finding people to become investors, especially given that those stockholders
do not risk personal liability for the business debts. If someone files a lawsuit
against the corporation, the owners aren’t personally responsible and their
personal assets are protected.

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COMPANY PERSONNEL
Figure 13.2 Divisional Organizational Chart
Figure 13.3 Functional Organizational Chart

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I. EXECUTIVE DEPARTMENT
The Executive Department controls and monitors the company's
operation such as overall administration, planning, supervision and fiscal
functions. It is composed of the Chief Executive Officer (CEO) and executive
secretary. The CEO handles and supervises the other four departments while
the executive secretary manages the CEO’s appointment and keeps all the
records of the company.
I-1. Chief Executive Officer

 The head of the company which manages all the sectors of the
company to maximize the shareholders’ return on used capital and
ensures the profitability of the company.
 Determines the short-term, mid-term and long-term objectives of
the company and ensure that action plans or policies are in place to
meet those objectives
 Accountable for developing a sound working environment to the
employees, maintaining a good relationship with business partners,
clients and the government.
 Enhancing and/or developing, implementing and enforcing policies
and procedures of the organization by way of systems that will
improve the overall operation and effectiveness of the corporation
I-2. Executive Secretary

 Manage all department meetings, attend and record the minutes of
all the meetings.
 Maintain corporate documents and records
 Issue a notice of the general meetings to shareholders
 Manage the CEO’s appointment internally and externally

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II. TECHNICAL DIVISION

The Technical Division is in-charge for the overall operation of the
manufacturing facility. The plant manager oversees the Quality Assurance
Department, Research and Development Department and Operations
Department. It is also included in this department are the Plant Personnel,
Warehouse Staff. On the other hand, the Production Department headed by
the production supervisors is responsible for safe and efficient processes in
producing sodium aluminosilicate monolith. Included in this department are
the control room engineers, safety engineers and pollution control officer.
Moreover, the Quality Assurance Department, comprising of quality
assurance head and laboratory analysts, ensures that the product conforms
to the standard properties. Finally, the R&D Department, composed of R&D
head and staff, are responsible for keeping the product up to date with the
new trends in technology.
Plant Manager
 Overseeing the production process and drawing up a production
schedule ensuring that the production is cost effective
 Making sure that the product is produced on time and is sought
after quality
 Working out the human and material resources needed for the
production department
 Monitoring the production processes and adjusting schedules as
needed
 Being responsible for the selection and maintenance of equipment
 Works out and implement a standard operating procedure to meet
the production target
 Ensuring that health and safety guidelines are followed
 Implements and enforce quality control and tracking programs to
meet quality objectives

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II-A. Production Department

1. Production Supervisors
There are three production supervisors in the company in which one
of them is present per shift. Their responsibilities include:
 Prepares and maintains production reports
 Supervision of the workers to ensure compliance to all
manufacturing schedules.
 Working out the human and material resources needed for
the production department
 Preparing appropriate budgets and reports to be submitted to
management and ensure optimal level of profitability for
plant.
 Ensures efficient collaboration and coordination between
relevant departments including the supply chain
management
 Maintain optimal quality of all products and recommend
improvements to production process for same and prioritize
all schedules
 Manage inventory of all plant supplies and ensure accuracy in
same according to required policies and procedures and
manage all communication for safety standards
2. Control Room Engineers

There are three control room engineers in the company, two of
them are present in each shift. One control room engineer is
assigned to the process control of the preliminary treatment of the
raw materials while the other is responsible for the process control
of the sodium aluminosilicate production. Additional responsibilities
of them are:
 Developing process control strategies and standards to
improve operational efficiency

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 Calibrating the process control devices to ensure that it is

effective
 Implementing changes to the process control system if
necessary
 Assisting process technology and production teams in the
development and programming of control sequences for all
system-controlled processes
 Executing work assignment in accordance to company
standards and quality systems
 Providing monthly process control reports to update the
supervisors on the weak spots of the process control in
operation
 Prepare a report on possible need for maintenance of the
process control devices
3. Maintenance Engineer
There is one maintenance engineer in the company. The
responsibilities of the maintenance engineer are:
 Provide technical assistance and maintenance of the
company equipment
 Analyze equipment malfunctions and failures and accordingly
develop corrective actions
 Develop improvements to enhance equipment reliability and
scalability
 Monitor equipment performance and suggest improvements
4. Safety Engineers
There is one safety engineers in the company, one of them are
present in each shift. The responsibilities of the safety engineer are:
 Identify and evaluate hazardous conditions and practices
 Perform an internal safety audit twice annually
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 Implement hazard control and safety programs

 Develop hazard control methods and procedures.
5. Pollution Control Officer

There is one pollution control officer in the company. His
responsibilities include:
 Supervising the wastewater treatment facility
 Analyzing the amount of power consumed during the
treatment of wastewater
 Ensures that the effluent air and water in the company meets
the standards provided by the government
6. Production Operators
There are six production in the company in which two personnel are
present in every shift. His responsibilities include:
 Responsible for measuring, grading, feeding the raw
materials in each equipment
 Operates the production line equipment
 Report equipment faults to the in-line supervisors
 Monitors the production process and carry out basic testing
and quality checks
7. Warehouse Personnel
There are three warehouse personnel in which one personnel is
present in every shift. His responsibilities include:
 Checking the condition of the raw material, chemicals, and
product before coming in and out of the warehouse
 Prepares orders by processing requests and supply orders;
pulling materials; packing boxes; placing orders in delivery
area

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 Maintains inventory controls by collecting stock location

orders and printing requests
 Completes deliveries by driving truck or van to and from
vendors
II-B. Quality Assurance Department

1. Quality Assurance Head
There is one QA head in the company. His responsibilities include:
 Responsible for developing quality procedures, standards and
specifications for GeoLith Inc.
 Review customer requirements and making sure they are met
 Ensuring a high level of internal and external customer
service. Investigating and correcting customer issues and
complaints relating to quality.
 Supervising workers engaged in inspection and testing
activities to ensure high productivity and high technical
integrity.
 Developing and analyzing statistical data and product
specifications to determine standards and to establish quality
and reliability expectancy of finished products.
 Approves the batches of production based on the testing
methods used by the department.
 Coordinating objectives with production procedures in
cooperation with other managers to maximize product
reliability and minimize costs.
2. Laboratory Analyst
There are three analysts in the company in which two of them are
present in each shift. Their responsibilities include:
 Checking the quality of the raw materials, the in-process
results, and the product

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 Ensuring cleanliness, good manufacturing practices and

safety standards are met
 Developing new testing methods
 Testing the wastewater effluent samples of the company
 Participates in internal audits in coordination with the safety
engineer
II-C. Research and Development Department
1. Research and Development Head
There is one research and development head in the company. Their
responsibilities include:
 Selecting fundamental technology used for improvement of
GeoLith Inc. process
 Submitting periodical reports to management showing the
status of R&D progress
 Developing and implementing methods and procedures for
monitoring projects such as preparation of records of
expenditures and research findings, progress reports, and
staff conferences, in order to inform management of current
status of each project.
2. Research and Development Staf

There is one R&D staff in the company. Their responsibilities
include:
 Gathering information and analyzing the company’s present
status for certain technological advancement and product
reformulation in order to provide better quality of sodium
aluminosilicate monolith
 Improving the product and keeping the product up to date
with the new trends in technology
III. ADMINISTRATION DIVISION

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The administration division comprises of Finance Department, Human

Resource Department, and Supply Chain Management Department.
III-A. FINANCE DEPARTMENT

The Finance Department is managed by the Finance Manager who is
responsible for all monetary concerns. Under his supervision are the auditor,
accountant, and pay-roll clerk. This department is responsible for the detailed
record of all money coming in and out of the company.
1. Finance Manager
There is one finance manager in the company. His responsibilities
include:
 Providing financial advice to clients to enable them to make sound
business relations
 Providing and interpreting financial information
 Responsible for managing the finances to maximize the return on
investment of the company
 Prepares monthly and quarterly financial analysis to determine the
status of the finances of the company and to make decisions on
how to mitigate the risks on the return on investment
2. Accountant
There is one accountant in the company. His responsibilities include:
 Analyze the present financial information and prepare an accurate and
timely financial reports and statements by applying the principles of
accounting
 Compiles and analyzes the financial information of the company and
the its historical data
 Responsible for preparing the weekly cash position reports and collects
and issues official receipts
3. Auditor

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There is one auditor in the company. His responsibilities include:

 Evaluation of the financial reports of the company
 Counts cash on hand, inspect notes receivable and payable,
negotiable securities and cancelled checks
 Reviews data regarding material assets, net worth, liabilities, capital
stock, surplus income and expenditures.
4. Payroll Clerk
There is one payroll clerk in the company. His responsibilities include:
 Assists in the process of making that the company pays employees
accurately and on time
 Collecting and organizing time sheets and enter information related
to employees and pay periods into a computer
 Double-check aspects of payroll related to hourly wages and yearly
salaries as well as overtime, vacation and sick days
 Maintaining payroll information by collecting, calculating, and
entering data
 Resolves payroll discrepancies by collecting and analyzing
information
 Updating payroll records by entering changes in exemptions,
insurance coverage, savings deductions, and job title and
department/division transfers
III-B. HUMAN RESOURCE DEPARTMENT

The HR Manager heads the Human Resource Department which is
responsible for all the matters with respect to the recruitment, training, and
health and safety conditions of all of the employees and workers in the plant.
Also, under this department are the HR representative, company nurse,
security guards, janitorial staff, and company drivers.
1. Human Resource Manager
There is one HR manager in the company. His responsibilities include:

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 Supervising different department functions and managing

employees
 Ensuring that employees are well-versed in their areas of expertise
 Providing advice to the staff, supervisors, and trains them in various
aspects
 Organizing the process of recruiting and training
 Conducting employee performance reviews and informing the
employees about the policies of the company
 Maintaining the work structure by updating job requirements and
job descriptions for all positions
 Maintaining organization staff by establishing a recruiting, testing,
and interviewing program
2. Human Resource Representative

There is one HR representatives in the company. His responsibilities
include:
 Screening, interviewing, and testing applicants; notifying existing
staff of internal opportunities; maintaining personnel records;
obtaining temporary staff from agency
 Maintaining human resources records by recording new hires,
transfers, terminations, changes in job classifications, merit
increases; tracking vacation, sick, and personal time
 Orienting new employees by providing orientation information
packets; reviewing company policies; gathering withholding and
other payroll information; explaining and obtaining signatures for
benefit programs
 Updating job knowledge by participating in educational
opportunities; reading professional publications
3. Company Nurse
There is one nurse in the company. His responsibilities include:
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 Providing basic health services to the employees

 Administering first aid treatments and provide medications for
employees as needed
 Assisting all injured employees to the nearest hospital
 Maintaining all employees medical and other similar records
 Securing and ensuring that the sick employees submit "fit to work"
certificate
4. Company Driver
There is one drivers in the company. His responsibilities include:
 In-charge of the company vehicle during the transportation of raw
materials and distribution of product
 Load, unload, prepare, inspect and operate delivery vehicle
Assisting all injured employees to the nearest hospital
5. Security Staf
There are three security staff in the company in which one of them are
present every shift. Their responsibilities include:
 Securing premises and personnel by patrolling property; monitoring
surveillance equipment; inspecting buildings, equipment, and
access points; permitting entry
 Maintaining environment by monitoring and setting building
controls
 Preventing losses and damage by reporting irregularities; informing
violators of policy and procedures; restraining trespassers
 Completing reports by recording observations, information,
occurrences, and surveillance activities; obtaining signatures
6. Utility Personnel
There are three utility personnel in the company in which one of them
are present every shift. Their responsibilities include:
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 Ensuring the cleanliness in the plant

 Handling minimal repairs in the company
 Notifying management of occurring deficiencies or needs for repairs
III-C. SUPPLY CHAIN MANAGEMENT DEPARTMENT

The supply chain management department must act as a guide and
lead the company's other departments in developing, producing, fulfilling,
and servicing products or services for their customers. They are also the one
responsible for the promotion and sales of the product. The overall sales and
profit of the company will depend of the strategy and tactics employed by the
marketing and sales staff.
1. Supply Chain Manager
 Establishing sales objectives by forecasting and developing annual
sales quotas for regions and territories; projecting expected sales
volume and profit for sodium aluminosilicate monolith
 Implementing sales programs by developing field sales action plans
 Managing sales volume, and selling price by keeping current with
supply and demand, changing trends, economic indicators, and
competitors
 Establishing and adjusting selling price by monitoring costs,
competition, and supply and demand
2. Purchasing Officer
There is one purchasing officers in the company, the responsibilities
are:
 Processes purchasing transactions for services, equipment,
stationery and other goods
 Performs duties such as identifying procurement needs, reviewing
purchase requisitions, awarding supplier tenders, and supervising
performance of contractors

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 Responsible for the preparation and process purchase orders and

documents in accordance to the company policies and procedures
 Maintain complete and updated purchasing records and data
3. Customer Service Representative

There are two customer service representatives in the company, the
responsibilities are:
 Investigate customer’s problems and find solutions
 Communicate with customers via phone, email, or letter
 Resolve complaints and order issues
 Oversee product exchanges and returns
4. Marketing Strategists
There are two marketing strategists in the company, the
 Creating and developing effective promotional strategies that
brings higher market sales.
 Helping the sales manager to develop advertising campaigns and
assist him on daily advertising activities
 Elaborating marketing strategies and participating in the
implementation process
5. Sales Representatives
There are two sales representatives in the company, the
 Establishes, develops and maintains business relationships with
current customers and prospect customers in the assigned market
segment
 Develops interesting way to sell the product through
communicating with the clients

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 Ensuring that all purchased items are delivered to the customers in

a prompt manner.
 Providing information regarding each product and any discount
offers associated with it
In total, GeoLith Incorporated has only 48 employees since it is a

starting company. Table 13.1 shows the qualifications, experience
requirement, and corresponding monthly salary of the employees at GeoLith
Incorporated.
QUALIFICATIONS AND PRESENT MONTHLY SALARY OF COMPANY

PERSONNEL
Table 13.1 Qualifications and Present Monthly Salary of Company Personnel
PRESEN
T
DEPARTMEN EXPERIEN MONTHL
POSITION QUALIFICATIONS
T CE Y
SALARY
(Php)
Chief Master of Business
5 to 10
Executive Administration or 80,000
EXECUTIVE years
Officer equivalent
DEPARTMEN
4-year Business
T Executive 1 to 2
Administration 20,000
Secretary years
degree holder
PRODUCTIO Licensed Chemical/ 3 to 5
Plant Manager 40,000
N Mechanical Engineer years
DEPARTMEN Production Licensed Chemical/ 1 to 2
28,000
T Supervisor Mechanical Engineer years
Control Room Licensed Chemical/ 1 to 2
22,500
Engineer Mechanical Engineer years
Maintenance Licensed Mechanical 1 to 2
22,500
Engineer Engineer years
Pollution Licensed Chemical 1 to 2 19,500
Control Officer Engineer years

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Safety Licensed Chemical 1 to 2

19,500
Engineer Engineer years
Process At least High School 1 to 2
11,000
Operators Graduate years
Warehouse At least High School 1 to 2
9,500
Personnel Graduate years
Quality
Licensed Chemist/ 3 to 5
Assurance 28,000
QUALITY Chemical Technician years
Head
ASSURANCE
Licensed Chemist/
DEPARTMEN
Laboratory Chemical 1 to 2
T 16,000
Analyst Technician/ years
Chemical Engineer
RESEARCH Research and
Licensed Chemist / 3 to 5
AND Development 28,000
Chemical Engineer years
DEVELOPME Head
NT
Research and
DEPARTMEN Licensed Chemist/ 1 to 2
Development 16,000
T Chemical Engineer years
Staff
Finance Certified Public 3 to 5
31,000
Manager Accountant years
Bachelor’s Degree
Holder in 1 to 2
Accountant 17,000
Accountancy or years
FINANCE
equivalent
DEPARTMEN
Bachelor’s Degree
T 1 to 2
Auditor Holder in Business 16,000
years
Administration
Bachelor’s Degree
1 to 2
Payroll Clerk Holder in Business 14,000
years
Administration
HUMAN Bachelor’s Degree
RESOURCES Human Holder in Human
3 to 5
DEPARTMEN Resources Resource 27,000
years
T Manager Management or
Psychology
Bachelor’s Degree
Human
Holder in Human
Resources 1 to 2
Resource 15,000
Representativ years
Management or
e
Psychology
Company 1 to 2
Licensed Nurse 15,000
Nurse years
Security Staff At least High School 1 to 2 9,500
Graduate years

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At least High School

Company Graduate with 1 to 2
9,500
Driver Professional Driver years
License
Utility At least High School 1 to 2
9,500
Personnel Graduate years
Bachelor’s Degree
Supply Chain 3 to 5
Holder in Business 27,000
Manager years
Administration
Bachelor’s Degree
Purchasing 1 to 2
Holder in Business 19,000
Officer years
Administration
SUPPLY
CHAIN Customer Bachelor’s Degree
MANAGEME Service Holder in Business 1 to 2
16,000
NT Representativ Administration Major years
DEPARTMEN e in Marketing
T Bachelor’s Degree
Marketing Holder in Business 1 to 2
15,000
Strategist Administration Major years
in Marketing
Bachelor’s Degree
Sales
Holder in Business 1 to 2
Representativ 14,000
Administration Major years
e
in Marketing
As shown in Table 13.1, the employees of the company workforce were

compensated according to their qualifications and to the wage rates set by
the local government. Since the company was established in Sta. Teresita
Batangas, the monthly compensation for the different positions of employees
will be based on the standard salary in Region IV in the year 2018, which is
PhP 302.50 daily or Php 9075 monthly.
Workers with the least qualifications such as utility personnel, company

driver, security staff and warehouse personnel were given an above minimum
salary of Php 9,500 monthly. On the other hand, employees who are Licensed
Engineers has a minimum salary of Php 19,500 as Safety Engineer up to Php
40, 000 as Plant Manager.

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EMPLOYEE BENEFITS
Under the Republic Act No. 6715 or the Philippine Labor Code, the
seven basic employee benefits for a legal worker in the Philippines are
identified. GeoLith Inc., are entitled to the following benefits to be given to
the employee:
1. Social Security System (SSS) Contributions
The social security system benefits aim to provide protection for the
SSS member against socially recognized hazard conditions, such as sickness,
disability, maternity, old age and death, or other such contingencies that
resulted in loss of income or results to a financial burden.
The employee and the company will contribute for the social security
benefits of the said employees in accordance to the given contributions table
by the Philippine Social Security System.
2. Healthcare Benefits through National Health Insurance Program
(PhilHealth)
According to the Republic Act 7875 or the Medicare Program
administered by the Philippine Health Insurance Corporation, the employee
and his employers shall contribute for the medical insurance of the said
employee. Effective January 2018, the monthly premium contributions shall
be at the rate of 2.75% computed straight based on the monthly basic salary,
with a salary floor of P10,000 and a ceiling of P40,000, to be equally shared
by the employees and employer.
Similar to the SSS contribution, the PhilHealth contribution will be
deducted to the monthly salary of the employee and the employer’s
contribution will be financed by the allocated labor budget.
3. Housing Loan Benefits through Home Development and Mutual

Fund (PAG-IBIG/HDMF)
The employee and employer is required to contribute per to the
employee's Home Development and Mutual Fund. In accordance to the
periodic remittance schedule provided by HDMF, the employer(s) will remit
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this contribution, in addition to that of the employee's, which is to be

deducted from his payroll. For basic pays over Php 1,500.00, both the
employee and employer’s contribution is 2 percent.
4. The 13th Month Pay

As mandated by the Presidential Decree No. 851, the employee shall
receive a bonus salary equivalent to one (1) month, regardless of the nature
of his/her employment, not later than December 24 of every year.
5. Overtime Pay
According the Labor Code Article 87, work may be performed beyond
eight (8) hours a day provided that the employee is paid for the overtime
work, an additional compensation equivalent to his regular wage plus at least
twenty-five percent (25%) of his wage. Work performed beyond eight hours
on a holiday or rest day shall be paid an additional compensation equivalent
to the rate of the first eight hours on a holiday or rest day plus at least thirty
percent (30%) of his wage.
6. Night-Shift Diferential Pay

According the Labor Code Article 87, every employee shall be paid a
night shift differential of not less than ten percent of his regular wage for
each hour of work performed between ten o’clock in the evening and six
o’clock in the morning.
7. Meal and Rest Periods

Under Article 83 of the Labor Code of the Philippines, the employee is
provided a one-hour period for regular meals, when working on an eight (8
hour) stretch. Employees are also provided adequate rest periods in the
morning and afternoon which shall be counted as hours worked. The
manpower schedule of the company is shown in Table 13.2
Table 13.2 Manpower Schedule
POSITION SHIFT/TIME
Economic
Monoliths Study
Executive Department
Chief Executive Officer 1st/8:00 AM – 5:00 PM
Executive Secretary 1st/8:00 AM – 5:00 PM
Production Department
Plant Manager 1st/8:00 AM – 5:00 PM
Production Supervisor 1 1st/6:00 AM- 2:00 PM
Production Supervisor 2 2nd/2:00 PM – 10:00 PM
Production Supervisor 3 3rd/10:00 PM – 6:00 AM
Control Room Engineer 1 1st/6:00 AM- 2:00 PM
Control Room Engineer 2 2nd/2:00 PM – 10:00 PM
Control Room Engineer 3 3rd/10:00 PM – 6:00 AM
Maintenance Engineer 1st/6:00 AM- 2:00 PM
Pollution Control Officer 1st/8:00 AM – 5:00 PM
Safety Engineer 1st/6:00 AM- 2:00 PM
Process Operators 1, 2 1st/6:00 AM- 2:00 PM
Process Operators 3, 4 2nd/2:00 PM – 10:00 PM
Process Operators 5, 6 3rd/10:00 PM – 6:00 AM
Warehouse Personnel 1 1st/6:00 AM- 2:00 PM
Warehouse Personnel 2 2nd/2:00 PM – 10:00 PM
Warehouse Personnel 3 3rd/10:00 PM – 6:00 AM
Quality Assurance Department
Quality Assurance Head 1st/8:00 AM – 5:00 PM
Laboratory Analyst 1 1st/6:00 AM- 2:00 PM
Laboratory Analyst 2 2nd/2:00 PM – 10:00 PM
Laboratory Analyst 3 3rd/10:00 PM – 6:00 AM
Research and Development Department
R&D Head 1st/8:00 AM – 5:00 PM
R&D Staff 1st/8:00 AM – 5:00 PM
Finance Department
Finance Manager 1st/8:00 AM – 5:00 PM
Accountant 1st/8:00 AM – 5:00 PM
Auditor 1st/8:00 AM – 5:00 PM
Payroll Clerk 1st/8:00 AM – 5:00 PM
Human Resources Department
Human Resources Manager 1st/8:00 AM – 5:00 PM
Human Resources 1st/8:00 AM – 5:00 PM
Representative
Company Nurse 1st/8:00 AM – 5:00 PM
Security Staff 1 1st/6:00 AM- 2:00 PM
Security Staff 2 2nd/2:00 PM – 10:00 PM
Security Staff 3 3rd/10:00 PM – 6:00 AM
Company Driver 1st/8:00 AM – 5:00 PM
Utility Personnel 1 1st/6:00 AM- 2:00 PM
Utility Personnel 2 2nd/2:00 PM – 10:00 PM

Economic
Monoliths Study
Utility Personnel 3 3rd/10:00 PM – 6:00 AM

Supply Chain Management Department
Supply Chain Manager 1st/8:00 AM – 5:00 PM
Purchasing Officer 1st/8:00 AM – 5:00 PM
Customer Service 1st/8:00 AM – 5:00 PM
Representative
Marketing Strategist 1st/8:00 AM – 5:00 PM
Sales Representative 1st/8:00 AM – 5:00 PM

Economic
Monoliths Study
Table 13.4. Sample Payroll of GeoLith Incorporated
Deductions (Employee Net Pay

Present Contributions) Total with
Departmen
Position Salary Deductio Income
t (1) PhilHealth PAG-
(Php) SSS (2) ns Tax
IBIG (3)
(Php)
Executive 1,600.0
Chief Executive Officer 80,000.00 581.30 1,100.00 3,281.30 76,718.70
Departmen 0
t Executive Secretary 20,000.00 581.30 275.00 400.00 1,256.30 18,743.70
Plant Manager 40,000.00 581.30 550.00 800.00 1,931.30 38,068.70
Production Supervisor 28,000.00 581.30 385.00 560.00 1,526.30 26,473.70
Control Room Engineer 22,500.00 581.30 309.38 450.00 1,340.68 21,159.33
Production Maintenance Engineer 22,500.00 581.30 309.38 450.00 1,340.68 21,159.33
Departmen Pollution Control
19,500.00 581.30 268.13 390.00 1,239.43 18,260.58
t Officer
Safety Engineer 19,500.00 581.30 268.13 390.00 1,239.43 18,260.58
Process Operators 11,000.00 399.70 151.25 220.00 770.95 10,229.05
Warehouse Personnel 9,500.00 345.20 137.50 190.00 672.70 8,827.30
QA Quality Assurance
28,000.00 581.30 385.00 560.00 1,526.30 26,473.70
Departmen Head
t Laboratory Analyst 16,000.00 581.30 220.00 320.00 1,121.30 14,878.70
Research and
R&D 28,000.00 581.30 385.00 560.00 1,526.30 26,473.70
Development Head
Departmen
Research and
t 16,000.00 581.30 220.00 320.00 1,121.30 14,878.70
Development Staff
Finance Finance Manager 31,000.00 581.30 426.25 620.00 1,627.55 29,372.45
Departmen Accountant 17,000.00 581.30 233.75 340.00 1,155.05 15,844.95
t Auditor 16,000.00 581.30 220.00 320.00 1,121.30 14,878.70
Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent Bleaching Earth for the Production of
Sodium Aluminosilicate Monoliths Economic Study 29
Payroll Clerk 14,000.00 508.70 192.50 280.00 981.20 13,018.80

Human Resources
27,000.00 581.30 371.25 540.00 1,492.55 25,507.45
Manager
Human Resources
HR 15,000.00 545.00 206.25 300.00 1,051.25 13,948.75
Representative
Departmen Company Nurse 15,000.00 545.00 206.25 300.00 1,051.25 13,948.75
t Security Staff 9,500.00 345.20 137.50 190.00 672.70 8,827.30
Company Driver 9,500.00 345.20 137.50 190.00 672.70 8,827.30
Utility Personnel 9,500.00 345.20 137.50 190.00 672.70 8,827.30
Supply Supply Chain Manager 27,000.00 581.30 371.25 540.00 1,492.55 25,507.45
Chain Purchasing Officer 19,000.00 581.30 261.25 380.00 1,222.55 17,777.45
Manageme Customer Service
16,000.00 581.30 220.00 320.00 1,121.30 14,878.70
nt Representative
Departmen Marketing Strategist 15,000.00 545.00 206.25 300.00 1,051.25 13,948.75
t Sales Representative 14,000.00 508.70 192.50 280.00 981.20 13,018.80
(1). According to SSS Contribution Table for Year 2019
(2). The monthly premium contributions shall be at the rate of 2.75% computed straight based on the monthly basic salary
(3). For basic pays over Php 1,500.00, both the employee and employer’s contribution is 2 percent.
The present salary is the amount that an employee must receive in return of his services to the company. On
the other hand, the net pay is the amount of money received by the employee after the deductions such as SSS,
PAG-IBIG, and Phil Health Contributions are removed. In Table 13.4, the income tax was not deducted because the
data on the marital status of the employee must be determined since it has a relationship with the income tax to be
deducted.
Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent Bleaching Earth for the Production of
Sodium Aluminosilicate Monoliths Economic Study 30
FACTORS FOR COST PROJECTION

1. PURCHASING POWER OF PESO
The Purchasing Power of Peso, as defined by the Philippine Statistics
Authority (PSA), is a measure of the real value of the peso in a given period
relative to a chosen reference period. This is the value of a currency
expressed in terms of the amount of goods or services that one unit of money
can buy. It is important because, all else being equal, inflation decreases the
amount of goods or services you would be able to purchase. An inverse
relationship exists between the purchasing power of peso and the consumer
price index.
On the other hand, the purchasing power loss or gain is an increase or
decrease in how much consumers can buy with a given amount of money.
Consumers lose their purchasing power when prices of goods increase,
whereas they gain their purchasing power when prices decrease. Some of the
causes which causes loss of purchasing power include government
regulations, inflation and natural and manmade disasters. As for the gain of
purchasing power, this includes the deflation and technological innovation.
In this section, the change in the purchasing power of peso is identified
from its base worth, going to its future worth in 2024. Hence, all values of PPP
for years 2013 to 2017 were obtained from the Philippine Statistics Authority
(PSA). Using the values of the historical purchasing power of peso, the
purchasing power value for the year 2024 can be projected, which is the start
of the manufacturing operation of the GeoLith Inc. With this calculated PPP,
this will be used as the basis for the computation of the raw material cost and
equipment cost for the year 2024.
Geopolymerization of Coal Fly Ash, Ceramic Tile Wastes and Spent Econo
Bleaching Earth for the Production of Sodium Aluminoslicate
Monolith mic 31
R.C. Macasil, A.P.P. Redublo, A.C.Santos, C.I.V.Torres Study
FACTORS INFLUENCING PURCHASING POWER OF PESO
1. Inflation and Deflation

Inflation is the number-one enemy of economy-wide purchasing power
of peso. Inflation is the process whereby prices slowly rise throughout all
sectors in an economy, effectively reducing the purchasing power of fixed
assets and current income levels. It is an ever-present reality that must be
counterbalanced by increases in wages, interest rates and other factors over
time.
On the other hand, in periods of deflation, in which prices drop

throughout an economy, relative purchasing power theoretically increases.
Deflation, however, can be caused by negative economic issues which may
themselves reduce purchasing power.
2. Wages and Employment

Employment levels and average salaries can have a tremendous effect
on economy-wide purchasing power. The more people who are employed, and
the more money they earn, the more discretionary funds they will have to
spend throughout the economy. Employment factors affect total purchasing
power rather than causing a relative shift. Employment does not necessarily
cause a currency to become stronger, yet it puts more currency in the hands
of consumers, boosting commercial and tax revenues.
3. Currency Considerations
Fluctuating exchange rates affect purchasing power in relation to other
currencies. As Philippine Peso devalues against another country, goods in
other country will be higher in Philippine peso. This fact in itself does not
necessarily affect purchasing power for domestic purchases, but businesses
that rely on suppliers in other country can experience dramatic price
increases for imported goods. These businesses may pass their higher costs
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on to consumers, contributing to inflation and diminished domestic

purchasing power.
HISTORICAL DATA OF PURCHASING POWER OF PESO (PPP)
Since the GeoLith plant is to be constructed at Sta. Teresita, Batangas,

the historical data of the purchasing power of peso from the year 2012 to
2017 for Region IV-A was obtained. These values were obtained from
Philippine Statistics Authority and is presented in Table 13.5. It can be
observed that the purchasing power values shows a decreasing pattern. A
decrease in the purchasing power of peso results to an increase on the price
of services and goods. Due to the decrease in PPP consumers can purchase or
consume less for the same amount of money.
Table 13.5 PPP from

2012 to 2017 Historical Data of Purchasing Power of Peso
(Region IV-A) 0.76
PPP 0.75
YEAR
VALUE 0.74
2013 0.75 0.73
2014 0.72 0.72
2015 0.72 0.71
2016 0.71 0.7
2017 0.69 0.69
0.68
0.67
0.66
2013 2014 2015 2016 2017
Figure 13.4 Historical Data of Purchasing Power of Peso
Figure 13.4 contains the historical data of purchasing power of peso

from the year 2013 to 2017. It can be observed in the bar graph that the
purchasing power of peso has a decreasing pattern. The factors that may
cause such changes are high inflation rate and high unemployment rate in
the Philippines these previous years.
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PROJECTION OF PURCHASING POWER OF PESO

The purchasing power of peso for the years 2018-2024 was forecasted
using five different methods:
1. Arithmetic Straight Line

2. Arithmetic Geometric Curve
3. Statistical Straight Line
4. Statistical Geometric Curve
5. Statistical Parabolic Curve
Combined PPP Projection

Projection of the Purchasing Power of Peso (PPP) is one of the factors to
be considered to verify the feasibility of the PPP value for evaluation of future
costs. The summary of projected values from 2018-2024 using five different
methods of projection is shown in Table 13.6.
The best projection method was selected based on the following

determinants or indicators: standard deviation, z-value, p-value, t-value and
Pearson correlation coefficient and average decrement rate.
The first indicator is the standard deviation, which is a measure to

quantify the amount of variation or dispersion of a set of data values (Bland &
Atman, 1996). A low standard deviation indicates that the data points tend to
be close to the mean value, while a high standard deviation indicates that the
data points are spread out over a wider range of values.
Moreover, the z-value, also known as standard score, way to compare

results from a test to a “normal” population. The absolute value of z
represents the distance between the raw score and the population mean in
units of the standard deviation. Z is negative when the raw score is below the
mean, positive when above.
Additionally, the percentage in the average decrement rates method

represents the trend of the PPP value. The lower the percentage of the
Monolith mic 34
average decrement rate, the more auspicious the projection method is due to
the fact that a minimal Peso value decrease indicates a strong Peso value
over the period. With a high percentage of the average decrement rate, it
means that the Peso value is drastically weakening due to the certain
economic factors including the inflation rate, consumer price index (CPI), etc.
Table 13.7: Summary of Projected PPP using Different Projection Methods
PROJECTIONS OF PPP
ARITHMETIC
STATISTICAL MODELS
MODELS
YEAR Straight Geometr Straigh Geometric Parabolic
Line ic Curve t Line Curve Curve
Method Method Method Method Method
2018 0.67 0.68 0.67 0.68 0.70
2019 0.66 0.68 0.66 0.66 0.72
2020 0.64 0.65 0.64 0.65 0.74
2021 0.63 0.63 0.63 0.64 0.78
2022 0.61 0.62 0.62 0.63 0.82
2023 0.59 0.61 0.60 0.60 0.85
2024 0.58 59 0.59 0.58 0.87
DETERMINANTS / INDICATORS
Standard
0.03 0.02 0.03 0.03 0.05
Deviation
Pearson
0.97 0.98 0.97 0.96 -0.93
Coefficient
z-value -1.50 -1.47 -1.50 -1.92 1.60
p-value 0.0004 0.0003 0.0001 0.0007 -
Annual
2.50 2.16 2.32 2.45 -3.35
Decrement Rate
Table 13.7 illustrates the five different projection methods. It shows

that all projection methods are in decreasing pattern except for the Statistical
Parabolic Curve, hence it is rejected.
The Arithmetic Geometric Curve gave the lowest values for the
standard deviation of 0.02 and annual decrement rate of 2.16%. However, it
is desirable to have a lower value for the annual decrement rate because the
higher it is indicates that the projection model presents a very weak Peso
value trend that could give a hyperinflation phenomenon which is very
impossible and unrealistic in nature.
Monolith mic 35
As for the z-value, it is much desirable to have a low value closer to

zero since it means that it is close to the actual mean. For this, the
Arithmetic Geometric Curve is the closest with a value of -1.47.
Among the remaining projection methods, Arithmetic Geometric Curve
appears to be the best selected projection methods for PPP value based on
presented criteria.
COMPARISON OF PURCHASING POWER OF PESO PROJECTION

0.9
Arithmetic Straight Line Arithmetic Geometric Curve
Statistical Straight Line Statistical Geometric Curve
0.85 Statistical Parabolic Curve
0.8
0.75
0.7
0.65
0.6
0.55
0.5
0.45
2019 2020 2021 2022 2023 2024
Figure 13.5 Comparison of Projection of PPP between the 5 Projection Methods
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BEST PROJECTION FOR PURCHASING POWER OF PESO

The selection of the most effective projection method for the
purchasing power of peso was based on the set of determinants used. The
method with most desirable results out of the five basis is selected as most
favorable method. Table 13.8 summarizes the computed values used for the
comparison of five different methods.
Table 13.8 Correlation Data for Purchasing Power of Peso Projection
PROJECTIONS OF PPP
ARITHMETIC
STATISTICAL MODELS
MODELS
Standard
0.03 0.02 0.03 0.03 0.05
Deviation
Pearson
0.97 0.98 0.97 0.96 -0.93
Coefficient
z-value -1.50 -1.47 -1.50 -1.92 1.60
p-value 0.0004 0.0003 0.0001 0.0007 -
Annual
2.50 2.16 2.318 2.45 -3.35
Decrement Rate
The comparison of five different projection methods above showed

that the Arithmetic Geometric Curve Method has the most desirable
values among the others.
It has the lowest standard deviation of 0.02, implying that the data
are relatively close to each other. As for the z-value, arithmetic geometric
curve has a value of -1.47 which is the closest to zero. The closer it is to
zero, the better, for it means that the data is relatively close to the mean.
Furthermore, it has the lower and a realistic annual decrement rate of
2.16%.
Since, this Arithmetic Geometric Curve method is the most
favorable, it is used as the value for the purchasing power of peso by
the year 2024 which is 0.59
Monolith mic 37
INDICES OF COMPENSATION
The index of compensation is commonly used to project the
compensation of employees that change over time. It is a quarterly report of
the cost of compensation that is release in the final month of the quarter.
Index of compensation also presents the changes in wages, bonuses and
benefits from the previous quarter. With the exception of the federal
government employees, all the non-farm industries are covered.
FACTORS AFFECTING THE INDICES OF COMPENSATION

There are several factors the affect the compensation of the employees:
1. Productivity
The compensation increases with the increase in the production.
Thus to earn more the workers work harder to improve the production
of the company.
2. Cost of Living
The cost of living index also influences the employee
compensation in a way that with the increase or decrease in the
general price level and consumer price index, the wage salary is to be
varied accordingly.
3. Labor Unions
The labor union negotiate with the company about the needs of
the labor force like compensation. Like when the labor force is involved
in work that is dangerous and therefor, demands more money for
endangering their lives.
4. Labor Laws
There are laws passed by the government to protect the workers
from explotation of employer. The payment of wages Act 1936, The
Minimum wages act 1948, The payment of bonus act 1965, Equal
remuneration act 1976, Payment of Gratuity Act 1972 are some of the
labor acts that effect the compensation received by the workers.
Monolith mic 38
HISTORICAL DATA OF INDEX OF COMPENSATION

Table 13.9 contains the historical date of the index of compensation
from the year 2012 to 2017. It was obtained from the Philippines Statistics
Authority. As can be observed from the values in the table the index of
compensation showed a steady increase in value, obtaining its highest value
ate the year 2016, with a value of 1,730. 60 but from 2016 to 2017 there is a
10.23% decrease in the value of index of compensation but despite the
decrease it is still higher from the index compensation value in the year 2015.
Table 13.9 Index of

Compensation from 2012 to
Index Of Compensation
2017 1,800.00
1,600.00
INDEX OF
1,400.00
YEA
1,200.00 COMPENSATI
1,000.00
R ON
800.00
VALUE
600.00
201
400.00
200.00
1,232.40
2
0.00
201 2012 2013 2014 2015 2016 2017
1,288.50
3
201
Year
1,318.80
4
20113.6 Historical Data of Index of Compensation
Figure
1,373.70
5
Figure 13.6 contains the
201historical data of index of compensation from
1,730.60
6 observed in the bar graph that the index of
the year 2012 to 2017. It can be
201
compensation has an increasing pattern. The increasing pattern of index of
1,553.58
7
compensation it can be expected that the cost will be passed on to the
consumers resulting in the price inflation of finished goods.
PROJECTION OF INDEX OF COMPENSATION

Monolith mic 39
The index of compensation for the years 2018-2024 was forecasted

using five different methods:
1. Arithmetic Straight Line
2. Arithmetic Geometric Curve
3. Statistical Straight Line
4. Statistical Geometric Curve
5. Statistical Parabolic Curve
Combined Index of Compensation Projection

Projection of the index of compensation is done in order to determine
the value of the index of compensation for the year 2024. The summary of
projected values from 2018-2024 using five different methods of projection is
shown in Table 13.10.
Table 13.10. Combined Index of Compensation Projection
PROJECTIONS OF INDEX OF COMPENSATION

ARITHMETIC
STATISTICAL MODELS
MODELS
2018 1,617.82 1,636.91 1,714.97 1,732.08 4,217.81
2019 1,682.05 1,724.71 1,800.32 1,838.34 4,737.87
2020 1,746.29 1,817.22 1,885.66 1,951.11 5,281.52
2021 1,810.52 1,914.69 1,971.01 2,070.79 5,848.74
2022 1,874.76 2,017.39 2,056.36 2,197.82 6,439.55
2023 1,939.00 2,125.60 2,141.70 2,332.65 7,053.92
2024 2,003.23 2,239.61 2,227.05 2,475.74 7,691.88
DETERMINANTS / INDICATORS
Standard
128.47 200.92 0.03 215.24 1,014.34
Deviation
Pearson
0.8436 0.8441 0.97 0.8441 0.8443
Coefficient
z-value 1.50 1.57 -1.50 1.81 1.77
p-value 0.0170 0.0169 0.0001 0.0169 0.0169
Growth Rate 3.6985 5.3637 2.32 6.90 33.531
In order to choose the best projection method, the standard deviation,

p-value, z-value, correlation coefficient and average growth rate were
computed and used it as the bases. A low standard deviation indicates that
Monolith mic 40
the data points tend to be close to the mean value, while a high standard
deviation indicates that the data points are spread out over a wider range of
values. Moreover, the absolute value of z represents the distance between
the raw score and the population mean in units of the standard deviation. Z is
negative when the raw score is below the mean, positive when above. The
method of projection which has lowest value of standard deviation and z-
value with a value near to zero is the most acceptable and reliable method of
projection. Additionally, the percentage in the average growth rates method
represents the annual growth rate or the trend of the index of compensation.
The higher the percentage of the average growth rate, the more auspicious
the projection method is.
COMBINED INDEX OF COMPENSATION PROJECTIONS

9,000.00
Arithmetic Straight Line Arithmetic Geometric Cruve
Statistical Straight Line Statistical Geometric Curve
8,000.00
Statistical Parabolic
7,000.00
6,000.00
5,000.00
Value
4,000.00
3,000.00
2,000.00
1,000.00
0.00
2017 2018 2019 2020 2021 2022 2023 2024 2025
Year
Figure 13.7: Projected index of compensation of the five different projection

methods
Monolith mic 41
BEST PROJECTION METHOD FOR INDEX OF

COMPENSATION
Choosing the most effective and best projection method for index of
compensation was based on the computed values of standard deviation, z-
value, growth rate, P-value, and correlation coefficient. Table 13.11
summarizes the computed values used for the comparison of the five
different methods. The projected values for year 2024 are also included. The
method with realistic projected value, lowest value of standard deviation,
acceptable z-value, p-value, correlation coefficient and increasing annual
growth rate is the most desirable method.
Table 13.11: Comparison of Different Projection Methods for Index of Compensation
PROJECTIONS OF INDEX OF COMPENSATION

ARITHMETIC
STATISTICAL MODELS
MODELS
Standard
128.47 200.92 0.03 215.24 1,014.34
Deviation
Pearson
0.8436 0.8441 0.97 0.8441 0.8443
Coefficient
z-value 1.50 1.57 -1.50 1.81 1.77
p-value 0.0170 0.0169 0.0001 0.0169 0.0169
Growth Rate 3.6985 5.3637 2.32 6.90 33.531
Among the 5 type of projection methods the projected value of

Statistical Parabolic Curve has the highest average growth rate and highest
projected index of compensation but the standard deviation of it is the worst
of all the methods which means the data it produced is too far from the mean
or the least accurate among the methods. That is the main reason why it
wasn’t chosen as the method to project the index of compensation. In
Arithmetic Straight Line the data it produced has the lowest Standard
Deviation with a value of 128.47 which means among the method the data it
projected is the most accurate and the closest to the mean but despite of this
Monolith mic 42
among the three remaining methods it has the lowest annual average growth
value and also the lowest correlation with a value of 0.8436 which signifies
among the method the index of compensation it produced has the least
correlation to the historical index of compensation that is why it is not chosen
as the method to project the index of compensation. Next is the Statistical
Straight line method among the three remaining method it has the lowest
growth rate so despite of it having the lowest standard deviation and z-score
it is still not chosen as the method to be used. The two best projection among
the 5 methods are Statistical Geometric Curve and Arithmetic Geometric
Curve but the researchers choose Arithmetic Geometric Curve as the best
method to project the index of compensation for the reason it has a lower
standard deviation and z-score which means the value it projected is tightly
clustered and more accurate than the projected value of Statistical Geometric
Curve. Correlation and p-value was not use to compare the two method
because the two method has the same value. From the projection of the
chosen method, the index of compensation for the year 2024 is expected to
be 2,239.61.
Monolith mic 43
PROCUREMENT
To put GeoLith Inc. into operation, a large amount of money is needed
to purchase the necessary equipment, auxiliaries, piping elements, buildings,
and land. The cost estimation of these materials are presented below.
A. COST OF EQUIPMENT
The equipment was to be procured in the year 2022 and the
corresponding projected estimates were calculated using the following
formula below. It is based from the purchasing power of peso for the base
year of 2019 and for the projected year of 2022.
PPP2019
Equipment Cost 2022 =Equipment Cost 2019 ×
PPP2022
Where: Purchasing Power of Peso on 2019 = 0.68
Purchasing Power of Peso on 2022 = 0.62
Since all equipment to be used by the company is supplied locally,

additional expenses for the shipping cost, insurance and Cost, Insurance, and
Freight (CIF) and Freight on Board (FOB) will not be considered.
Table 13.12 shows the summary of costs of the equipment required in

the manufacturing plant. The cost per equipment purchased locally is
inclusive of VAT.
Table 13.12 Summary of Costs and Projection Costs of Equipment by GeoLith Inc.
Cost per Projected

Equipment Cost per
Equipment Manufacturer
(2019), Equipment
PhP (2022), PhP
PROCESS EQUIPMENT
HG Silos Grain
1 Coal Fly Ash Silo 100,000.00 109,677.42
Management Solutions
Pneumatic
2 AMANO Philippines 200,000.00 219,354.84
Conveyor 1
Monolith mic 44
Double Roll
3 Multico Prime Power Inc. 400,000.00 438,709.68
Crusher
BETA Equipment Sales
4 Belt Conveyor 82,000.00 89,935.48
Corporation
Retsch – ITS Science
5 Ball Mill 400,000.00 438,709.68
(Phils.) Inc.
Pneumatic
6 AMANO Philippines 200,000.00 219,354.84
Conveyor 2
Isopropanol Mechatrends Contractors
7 110,000.00 120,645.16
Storage Tank Corporation
Batch Leaching Ace Packaging Co. (Phils) 1,866,634.0
8 2,047,276.00
Tank Inc. 0
Agitated
9 Sinofil Philippines, Inc 500,000.00 548,387.10
Nutsche Filter
1 Pneumatic
AMANO Philippines 200,000.00 219,354.84
0 Conveyor 3
1 Kaeser Kompressoren
Rotary Dryer 257,000.00 281,870.97
1 Philippines
1 Pneumatic
2 Conveyor 4
1 VESMACH Equipment and
Ribbon Blender 520,000.00 570,322.58
3 Machines
1 Pneumatic
4 Conveyor 5
1 Sodium Silicate Mechatrends Contractors
110,000.00 120,645.16
5 Storage Tank Corporation
1 Water Storage JMCC Industries
150,000.00 164,516.13
6 Tank Incorporated
Sodium
1
Hydroxide JGC Philippines, Inc 105,000.00 115,161.29
7
Dilution Tank
Hydrogen
1
Peroxide Weida Philippines, Inc. 95,000.00 104,193.55
8
Dilution Tank
1 Batch Stirred Ace Packaging Co. (Phils.) 1,866,634.0
2,047,276.00
9 Tank Reactor Inc. 0
Double Belt
2 BETA Equipment Sales
Laminating 740,000.00 811,612.90
0 Corporation
Conveyor
2 Steam Curing Shivang Furnaces and 1,500,000.0
1,645,161.29
1 Chamber Ovens Industries 0
2 Steam Curing
WYMA Solutions Inc 390,000.00 427,741.94
2 Tunnel
Monolith mic 45
2 Electric Steam CIMECH Systems

950,000.00 1,041,935.48
3 Boiler Industries, Inc.
11,142,268 12,220,552.
Total Process Equipment Cost
.00 00
B. COST OF AUXILLARIES AND WASTEWATER EQUIPMENT
The auxiliaries and wastewater treatment equipment were to be
procured also in the year 2022. Table 13.x shows the current and projected
cost of these equipment.
Table 13.x Summary of Cost and Projected Cost of Auxiliaries and Wastewater
Equipment
Projected
Cost per
Cost per
Equipment
Equipment Manufacturer Equipment
(2019),
(2022),
PhP
PhP
WASTEWATER TREATMENT EQUIPMENT
Flow
1 Equalization 62,500.00 68,548.39
Basin
Neutralizatio
2 n Contact 88,250.00 96,790.32
Energreen Technology, Inc.
Basin
Sedimentatio
3 44,216.00 48,494.97
n Tank
Aeration
4 54,458.00 59,728.13
Basin
Trickling
5 Brentwood Industries Inc. 601,842.21 660,085.00
Filter
6 Final Clarifier Energreen Technology, Inc. 44,216.00 48,494.97
Total Wastewater Treatment Equipment
895,482.21 982,141.78
Cost
MISCELLANEOUS EQUIPMENT
Cargo Truck Isuzu Philippines 2,821,880.6 3,094,965.8
1
(4 units) Corporation 0 19
Minor Raw
Mitsubishi Motors Philippine 574,709.677
2 Materials 524,000.00
Corp. 4
Truck (1 unit)
Forklift (2 701,843.475
3 Schindler Philippines 639,916.11
units) 5
Total Miscellaneous Equipment Cost 3,985,796. 4,371,518.
Monolith mic 46
71 972
C. COST OF PIPING SYSTEM

The breakdown of the cost of process, water, and steam piping
systems is shown in the succeeding tables. All materials namely, pipes
(Mayer Steel Pipe Corporation, Par Concrete Pipes), fittings (Precious
Steel), valves (United Power Commercial Corporation), and pumps (CN
Pump Philippines) are to be procured locally. Hence, duty taxes were not
included. Also, the cost per meter or per unit are inclusive of VAT.
Table 6.XX Summary of Cost and Projected Cost for Piping System
Projecte
Leng Total
Cost (per d Total
Piping Pipe/Auxillia th Cost
m, per Cost
System ries (m) / (2018)
piece) (2022)
Piece Php
Php
PROCESS PIPING
3 in, Sch 40 17.85 278.5 4,971.23 5,452.31
PP No.1 standard
(Isopropanol 3 1,232.75 3,698.25 4,056.15
elbow
Storage Tank 14,231.9 15,609.2
to Leaching gate valve 1 14,231.93
3 1
Tank) centrifugal 30,215.5 33,139.5
1 30,215.50
pump 0 8
3.50 in, Sch
10.21 312.25 3,188.07 3,496.60
40
PP No. 2
standard
(Leaching 2 1,757.20 3,514.40 3,854.50
elbow
Tank to
16,231.9 17,802.7
Agitated gate valve 1 16,231.90
0 3
Nustche Filter)
centrifugal 34,904.5 38,282.3
1 34,904.50
pump 0 5
Monolith mic 47
PP No.3 14,810.8 16,244.2

4 in, Sch 40 40.55 365.25
(Sodium 9 0
Silicate gate valve 1 2,999.10 2,999.10 3,289.34
Storage Tank
to Batch centrifugal 35,120.5 38,519.2
Stirred Tank 1 35,120.50
pump 0 6
Reactor)
25,528.7 27,999.2
6 in, Sch 40 32.61 782.85
4 6
PP No.4
standard 52,469.2 57,546.8
(NaOH Dilutio 5 10,493.84
elbow 0 6
n Tank to
23,140.4 25,379.8
Batch Stirred gate valve 1 23,140.47
7 7
Tank Reactor)
centrifugal 50,312.1 55,181.1
1 50,312.19
pump 9 1
PP No.5 1.5 in, Sch 40 18.57 110.5 2,051.99 2,250.56
(Hydrogen standard
Peroxide 5 999.75 4,998.75 5,482.50
elbow
Dilution Tank gate valve 1 843.5 843.50 925.13
to Batch
Stirred Tank centrifugal 23,500.0 25,774.1
1 23,500.00
Reactor) pump 0 9
36,061.0 39,550.8
PP No. 6 10 in, Sch 40 32.51 1,109.23
7 5
(Blowing
standard 31,515.0 34,564.8
Solution 2 15,757.50
elbow 0 4
Transfer to
55,809.3 61,210.2
Double Belt gate valve 2 27,904.68
6 7
Conveyor
centrifugal 65,750.3 72,113.2
Laminator) 1 65,750.35
pump 5 9
46,399.0 50,889.3
10 in, Sch 40 41.83 1,109.23
PP No.7 9 3
(Blowing standard 31,515.0 34,564.8
2 15,757.50
Solution elbow 0 4
Transfer to 55,809.3 61,210.2
gate valve 2 27,904.68
Steam Curing 6 7
Chamber) centrifugal 65,750.3 72,113.2
1 65,750.35
pump 5 9
735,340. 806,502.
Total Process Piping Cost
68 68
WATER PIPING
WP No.1 4 in, Sch 40 22.24 390.54 8,685.61 9,526.15
(Water standard 2 3,050.75 6,101.50 6,691.97
Storage Tank elbow
Monolith mic 48
12,400.7 13,600.8
5 2
centrifugal 20,999.5 23,031.7
to Main 1 20,999.53
pump 3 4
Header 1)
standard tee 1 4,575.20 4,575.20 5,017.96
4 in, Sch 40 11.08 390.54 4,327.18 4,745.94
WP No.2 standard
(Water 2 3,050.75 6,101.50 6,691.97
elbow
Storage Tank 12,400.7 13,600.8
to NaOH gate valve 1 12,400.75
5 2
Dilution Tank) centrifugal 20,999.5 23,031.7
1 20,999.53
pump 3 4
WP No.3 4 in, Sch 40 11.08 390.54 4,327.18 4,745.94
(Water standard
2 3,050.75 6,101.50 6,691.97
Storage Tank elbow
to Hydrogen gate valve 12,400.75 - -
Peroxide centrifugal 20,999.5 23,031.7
Dilution Tank) 1 20,999.53
pump 3 4
4 in, Sch 40 20.81 390.54 8,127.14 8,913.63
WP No.3 standard 10,037.9
(Water 3 3,050.75 9,152.25
elbow 5
Transfer to 12,400.7 13,600.8
Electric Steam gate valve 1 12,400.75
5 2
Boiler) centrifugal 20,999.5 23,031.7
1 20,999.53
pump 3 4
178,699. 195,992.
Total Water Piping Cost
43 93
STEAM PIPING
SP No.1 1.5 in, Sch 40 29.21 110.5 3,227.71 3,540.06
(Electric standard
Steam Boiler 2 999.75 1,999.50 2,193.00
elbow
to Batch 10,572.7 11,595.9
Stirred globe valve 1 10,572.75
5 2
Extraction
Tank) standard tee 1 2,500.95 2,500.95 2,742.98
18,410.2 20,191.9
3.5 in, Sch 40 58.96 312.25
SP No.2 6 0
(Electric standard
1 2,045.50 2,045.50 2,243.45
Steam Boiler elbow
to Rotary 18,975.2 20,811.5
globe valve 1 18,975.25
Dryer) 5 6
standard tee 1 4,575.20 4,575.20 5,017.96
Monolith mic 49
26,737.9 29,325.5
3.5 in, Sch 40 85.63 312.25
SP No.3 7 1
(Electric standard
1 2,045.50 2,045.50 2,243.45
Steam Boiler elbow
to Steam 18,975.2 20,811.5
globe valve 1 18,975.25
Curing Tunnel) 5 6
standard tee 1 4,575.20 4,575.20 5,017.96
19,077.3 20,923.5
SP No.4 2 in, Sch 40 80.58 236.75
2 1
(Electric standard 13,399.5 14,696.2
Steam Boiler 1 1299.75
elbow 0 3
to Steam 13,399.5 14,696.2
Curing globe valve 1 13,399.50
0 3
Chamber)
standard tee 1 2,595.20 2,595.20 2,846.35
163,112. 178,897.
Total Steam Piping Cost
55 63
WASTEWATER TREATMENT PIPING
15,842.0 17,375.2
WWP No.1 5 in, Sch 40 38.06 416.24
9 0
(Flow
sharp elbow 1 3,876.81 3,876.81 4,251.99
Equalization
Basin to 16,282.0 17,857.7
Neutralization 9 8
Contact Basin) centrifugal 38,480.1 42,204.0
1 38,480.19
pump 9 8
WWP No.2 5 in, Sch 40 21.32 416.24 8,874.24 9,733.03
(Neutralizatio standard 11,630.4 12,755.9
n Contact 3 3,876.81
elbow 3 6
Basin to 16,282.0 17,857.7
Primary gate valve 1 16,282.09
9 8
Sedimentation centrifugal 38,480.1 42,204.0
Tank) 1 38,480.19
pump 9 8
15,842.0 17,375.2
5 in, Sch 40 38.06 416.24
WWP No.3 9 0
(Primary standard
2 3,876.81 7,753.62 8,503.97
Sedimentatiao elbow
n Tank to 16,282.0 17,857.7
Aeration 9 8
Basin) centrifugal 38,480.1 42,204.0
1 38,480.19
pump 9 8
WWP No.4 5 in, Sch 40 18.05 416.24 7,513.13 8,240.21
(Aeration standard 2 3,876.81 7,753.62 8,503.97
Basin to elbow
Monolith mic 50
16,282.0 17,857.7
9 8
Trickling Filter) centrifugal 38,480.1 42,204.0
1 38,480.19
pump 9 8
15,842.0 17,375.2
5 in, Sch 40 38.06 416.24
9 0
WWP No.5 standard 11,630.4 12,755.9
3 3,876.81
(Trickling Filter elbow 3 6
to Secondary 451,339. 495,017.
gate valve 27.72 16,282.09
Clarifier) 53 55
centrifugal 38,480.1 42,204.0
1 38,480.19
pump 9 8
815,427. 894,339.
Total Wastewater Piping Cost
41 74
1,892,58 2,075,73
TOTAL PIPING SYSTEM COST (Php) 0.06 2.97
The projected total piping system cost is the sum of process, water,
steam, and wastewater piping cost in 2022 which are Php 806,502.68, Php
195,992.93, Php 178,897.63, and Php 894,339.74 respectively. which is Php
2,075,732.97.
D. COST OF LAND
The land cost is the sum of all the cost associated in the purchased of
land needed for the operation of the plant. The land covers the production
area, the wastewater treatment facility, floor area of the buildings and other
service facilities. Table 6.13 summarizes the expected land area of these
facilities.
Table 6.XX Breakdown of Area Allocation
Land
Facility Dimension
Area (m2)
(m2)
Administration Building (Main Building) 15 x 12 180
Production Area 70 x 50 3,500
Wastewater Treatment Facility 25 x 20 500
QA Building 8x5 40
Raw Material Warehouse 15 x 15 225
Monolith mic 51
Product Warehouse 30 x 30 900

Land Allowance (Walkways, Parking, etc.) - 1,500
Total 6,845
Area allotted for expansion 1,437
Total Land Area 8,282
The land area required for the construction of the plant is 6,845 m 2.
Allotting additional 1,437 m2 for future expansion of the plant, the total land
area required therefore for the plant site is 8,282 m 2 and can be rounded up
to 8,500 m2.
The following land property data obtained were provided by Engr.
Benjamin Benedicto Jr., Zoning Administrator at Office of the Municipal
Planning and Development Coordinator (MPDC) in Santa Teresita City Hall.
 Lot Address: Light Industrial Park at Poblacion 3, Sta. Teresita,
Batangas
 Land Area Available: 15,264 sq. m
 Market Value: Php 120.00 per square meter
The total cost of purchasing the land covers the land cost (excluded of
tax) and the cost of registration for the transferring of the real estate
property title which includes Documentary Stamp Tax, Transfer Tax, and
registration fee.
Table 6.XX Breakdown of Cost of Registration for the Transferring of Land

Ownership
Land Area 15,264.00 m2

Selling Price Php
1,831,680.00
Documentary Stamp Tax * 27,475.20
Transfer Tax ** 9,158.40
Registration Fee *** 45,792.00
Total Land Cost (2019) Php
1,914,105.60
Total Projected Land Cost (2020) Php
1,943,553.38
*
1.5% of the selling price
Monolith mic 52
**
0.5% of the selling price
***
0.25% of the selling price (source: http://real-estate-
guide.philsite.net/taxes.htm)
****
calculated from the projected purchasing power of peso on year 2019 and
base year 2018
E. COST OF BUILDING
The building cost is the sum total of all the cost associated in the
erection of the buildings in the manufacturing plant which includes both the
building cost and Mechanical and Electricity (M & E) cost. The building cost
covers the cost of materials used, the labor needed, and the devices used
during the construction of the building structure. The (M & E) cost covers
the cost of mechanical, electrical, fire, and plumbing services during the
construction. The table below summarizes the total expected cost based on
the building cost and M & E cost.
Table 6.XX Breakdown of Building Construction Cost
No. Are Unit Cost
Type of Dimensi Total Projected
of a Total Cost
Structure Buildin on Bldg M&E Unit Total Cost
Flo (m2 Php (2019)
g (LxW) Cost Cost Cost Php (2020)
or )
Administrat 15 x 12 25,00 10,50 35,50 6,390,000.0 6,684,923.0
3 180
ive Building m 0 0 0 0 8
Office
Quality
Class I 25,00 10,50 35,50 1,420,000.0 1,485,538.4
Control 1 8x5m 40
0 0 0 0 6
Building
Product
30 x 30 15,00 19,25 17,325,000. 18,124,615.
Storage 1 900 4,250
m 0 0 00 38
Warehouse Industri
Raw al Class
15 x 15 15,00 19,25 4,331,250.0 4,531,153.8
Material 1 225 4,250
m 0 0 0 5
Warehouse
29,466,250 30,826,230
Total Building Cost
.00 .77
Source: Langdon Seah Construction Cost Handbook (2016)
Note:
 The building cost for Office-Class I [Medium/high rise offices, average
standard] is Php 15,000 to Php 27,500
 The M & E cost for Office-Class I [Medium/high rise offices, average
standard])) is Php 7,900 to PhP 11,700
Monolith mic 53
 The building cost for Industrial – Class 1 (Industrial units, shell only
(conventional single storey framed units)) is Php 10,200 to Php 14,200
 The M & E cost for Industrial – Class 1 (Industrial units, shell only
(conventional single storey framed units)) is Php 3,600 to Php 4,300
The projected building cost is based from the purchasing power of peso
for the base year of 2019 and for the projected year of 2020 using the
formula:
PPP 2019
Building Cost 2020=Building Cost 2019 ×
PPP 2020
Where: PPP on 2019 = 0.68 PP on 2020 = 0.65

ERECTION / PLANT CONSTRUCTION
After the estimation of costs of equipment, auxiliaries, piping elements,
buildings, and land to be procured, these items must be installed. Hence, a
large sum of money is needed. The total amount of money needed to put the
project into operation is the total capital investment which is the sum of the
fixed capital investment and the working capital.
Total Capital Investment = Fixed Capital Investment + Working

Capital
The fixed capital investment refers to the capital needed to establish

the manufacturing plant. This is further classified into two: (1) the direct cost
or the cost of the material and labor involved in actual installation of the
facility which includes the purchased equipment, installation, piping system,
auxiliaries, electrical installation, buildings, yard improvement, service
facilities, and land; and (2) the indirect cost or the expenses that are not
directly involved with material and labor of actual installation of complete
facility that consists of engineering and supervision during construction
period, construction expenses, contractor’s fee, and contingencies.
Fixed Capital Investment (FCI) = Direct Cost + Indirect Cost
Monolith mic 54
On the other hand, working capital is the total amount of money

invested in (1) raw materials and supplies and (2) company registration.
Table 13.1 presents the detailed estimation of the total capital

investment for GeoLith Inc. The approximate percentages used in estimating
the fixed capital investment and working capital were based from the values
given by Peters and Timmerhaus (1991) in Table 26, p. 210 of the Plant
Design and Economics for Chemical Engineers (4 th Ed.).
Table 13.1: Breakdown of the Total Capital Investment

TOTAL CAPITAL INVESTMENT
Fixed Capital Investment (FCI) Cost in Php
Direct Cost (DC)
Purchased Equipment (PE) 12,220,552.00
Purchased Wastewater Treatment Equipment (PWWE) 982,141.78
Purchased Auxiliaries (PA) 4,371,518.97
Purchased Piping Elements (PP) 2,075,732.97
Installation, Insulation, and Painting (40% of PE) 4,888,220.80
Instrumentation and Process Controls with
Installation (18% of PE) 2,199,699.36
Electrical Equipment with Installation (12.50% of PE) 1,527,569.00
Buildings 30,826,230.77
Land 1,943,553.38
Yard Improvements (15% of PE) 1,833,082.80
Service Facilities (55% of PE) 6,721,303.60
69,589,605.4
3
Indirect Cost
Engineering and Supervision (17.50% DC) 12,178,180.95
Construction Expenses (9% DC) 6,263,064.49
Contractor’s Fee (9% DC) 5,567,168.43
Contingency (8% DC) 6,958,960.54
30,967,374.4
2
100,556,979.
Total Fixed Capital Investment (FCI)
85
Working Capital Investment (WCI) Cost in Php
Monolith mic 55
Raw Materials Inventory 8,407,183.92

Company Registration 1,285,714.29
Total Working Capital Investment (WCI) 9,692,898.21
110,249,878.
TOTAL CAPITAL INVESTMENT (TCI) in Php
06
Plant Design and Economics, 5th Edition, by Peters and Timmerhaus, p. 210
The total amount of money needed to put GeoLith Inc.’s project into
operation is Php 110,249,878.06
From table 13.1, the total direct cost is Php 69,589,605.43. The
breakdown of some direct costs such as equipment installation,
instrumentation and process controls, electrical equipment, yard
improvements, service facilities were presented in the table below:
Table 13.2: Breakdown of Some Direct Cost
Allotted Cost
Direct Cost Components Percentage
(Php)
Equipment Installation Cost
Labor 35% 1,710,877.28
Foundations 10% 488,822.08
Supports 20% 977,644.16
Platforms and Ladders 12% 586,586.50
Construction Expenses 15% 733,233.12
Safety Services 8% 391,057.66
4,888,220.80
Instrumentation and Control Cost
Instrumentation Costs 55% 1,209,834.65
Installation Labor Costs 30% 659,909.81
Auxiliaries 15% 329,954.90
2,199,699.36
Electrical Equipment Cost
Power Wiring 40% 611,027.60
Lighting 12% 183,308.28
Transformation and Service 40% 611,027.60
Instrument Control Wiring 8% 122,205.52
1,527,569.00
Service Facilities Cost
Steam Generation & Distribution 22% 1,453,254.83
Water Utilities 21% 1,416,923.46
Electric Utilities 12% 835,621.53
Process Waste Disposal 8% 544,970.56
Sanitary Waste Disposal 2% 145,325.48
Communications 1% 72,662.74
Monolith mic 56
Raw material Storage 3% 181,656.85

Finished product Storage 8% 544,970.56
Fire Protection System 3% 181,656.85
Safety Installations 2% 145,325.48
Other Service Facilities 18% 1,198,935.24
6,721,303.60
Yard Improvement Cost
Site Clearing 27% 488,822.08
Roads and Walks 20% 366,616.56
Railroads 20% 366,616.56
Fences 7% 122,205.52
Yard and Fence Lighting 7% 122,205.52
Parking Areas 7% 122,205.52
Landscaping 3% 61,102.76
Other Yard Improvements 10% 183,308.28
1,833,082.80
On the other hand, from Table 13.1, the total indirect cost is Php
30,967,374.42. The breakdown of indirect costs such as contractor’s fee,
engineering and supervision, construction expenses were presented in
the table below:
Table 13.3: Breakdown of Indirect Cost
Percentag Allocated Cost
Indirect Cost Components
e (Php)
Contractor's Fee
Up-front Planning 25% 1,391,792.11
Equipment, Piping and Canal 16% 890,746.95
Installation 15% 835,075.27
Overhead and Profit of Contractor 44% 2,449,554.11
5,567,168.43
Engineering and Supervision Costs
Engineering 27% 3,307,654.09
Drafting 59% 7,216,699.82
Purchasing 4% 451,043.74
Accounting, Construction & Cost
Engineering 4% 451,043.74
Travel and Living 4% 451,043.74
Reproductions and Communications 2% 300,695.83
12,178,180.95
Construction Expenses
Temporary Construction &
Operations 24% 1,521,029.95
Construction Tools and Rental 21% 1,342,085.25
Monolith mic 57
Home Office Personnel in Field 6% 357,889.40

Field Payroll 14% 894,723.50
Travel and Living 4% 268,417.05
Taxes and Insurance 17% 1,073,668.20
Start-up Materials and Labor 6% 357,889.40
Overhead Cost (e.g. Safety Services,
general plant maintenance) 7% 447,361.75
6,263,064.49
Contingencies
6,958,
Contingencies
100% 960.54
6,958,960.54
From table 13.1, the total working capital is Php 9,692,898.21. The
breakdown of working capital such as company registration and raw material
inventory were presented in the table below:
Table 13.3: Breakdown of Working Capital Investment

Allocated
Working Capital Investment Percentage
Cost (Php)
Company Registration Expenses
SEC Registrationa 23% 300,000.00
BIR Registrationa 23% 300,000.00
Patent Applicationb 8% 100,000.00
Trademark Applicationc 8% 100,000.00
Plant Site Acquisitiona 8% 100,000.00
Miscellaneous 30% 385,714.29
1,285,714.29
Raw Material Inventory

Raw Materials in Stock 25% 2,101,795.98
Finished & Semi-Finished Product in
stock 75% 6,305,387.94
8,407,183.92
Total Working Capital Investment 9,692,898.

21
a
Cost of Doing Business in the Philippines. Tourism Investment Portfolio.
b
Invention Patent Application. Philippine Forms.
c
Trademark-Related Fees. Intellectual Property Office. Republic of the Philippines.
Monolith mic 58
The raw-materials inventory included in working capital amounts to

one-month supply of the raw materials valued at delivered prices. Finished
products in stock and semi-finished products have a value approximately
equal to the total manufacturing cost for 1 month’s production. Because
credit terms extended to customers are usually based on an allowable 30-day
payment period, the working capital required for accounts receivable
ordinarily amounts to the production cost for 1 month of operation.
START-UP EXPENSE
Start-up expense is the costs for the first 3 months of the plant
operation which is vital for the company’s expenses since there will be
changes before the plant can operate at maximum design conditions. The
total start-up expense amounts to Php 12,077,989.30, which is 10% of the
total production cost. The breakdown of this expense is detailed in Table 13.5.
Table 13.4: Breakdown of Total Start-up Expense
TOTAL START UP EXPENSE
Startup Expense Cost in Php
MANUFACTURING COST
Direct Production Cost
Raw Materials 2,522,155.18
Operating Labor 1,643,576.76
Direct Supervisory (12.5% of OL) 287,625.93
Utilities (15% of TPC) 1,811,698.40
Maintenance and Repairs (5% of FCI) 603,341.88
Operating Supplies (0.75% of FCI) 75,417.73
Laboratory Charges (15% of OL) 246,536.51
Patents (3% of TPC) 362,339.68
7,552,692.08
Fixed Charges
Depreciation 131,806.60
Local Taxes (2.5% of FCI) 251,392.45
Insurance (0.7% of FCI) 70,389.89
453,588.93
Plant Overhead Cost (10% of TPC) 1,207,798.93
Total Manufacturing Cost 9,214,079.94

GENERAL EXPENSES
Administrative Cost 380,181.69
Monolith mic 59
(15% of Labor, Supervision & Maintenance)

Distribution and Selling Cost (11% of TPC) 1,328,578.82
Research and Development Cost 5% of TPC) 603,899.47
Financing (5% of TCI) 551,249.39
Total General Expenses 2,863,909.36
12,077,989.3
TOTAL STARTUP EXPENSES (Php)
0
Source: Plant Design and Economics, 4th Edition, by Peters and Timmerhaus (1991), p. 210
Note: OL = Operating Labor Cost; FCI = Fixed Capital Investment
TPC = Total Production Cost; TCI = Total Capital Investment
PRODUCTION
Aside from the total capital investment that is needed for the
procurement and erection phase, the total production cost is also determined,
which is the sum of the manufacturing cost and general expenses of the
company generated during its operation.
Total Production Cost = Manufacturing Cost + General Expenses
Manufacturing Cost are all expenses from the manufacturing

process operation and the physical equipment needed for the said process.
The manufacturing cost is subdivided into three which are the following: (a)
Direct Production Costs, consisting of the costs for raw materials,
operating labor, operating supervision, utilities, maintenance,
troubleshooting, operating supplies, laboratory charges, and patents; (b)
Fixed Charges, including the depreciation, local taxes, and insurance; and
(c) Plant Overhead Costs, which comprise of hospital and medical services,
payroll overhead, shipping and receiving facilities, interplant communication
and transportation, canteen and recreation facilities expense.
On the other hand, General Expenses includes administrative

expenses, distribution, marketing, and selling expenses, and research and
development expenses.
The total production cost needed for the operation of GeoLith Inc.
amounts to Php 120,779,893.01. The detailed list of costs is presented in
Monolith mic 60
Table 13.5. The approximate percentages used were based from the average
values of the given range by Peters and Timmerhaus in the Plant Design and
Economics for Chemical Engineers (4th Ed.), pp. 210.
The total production cost is the sum of manufacturing cost and general
expenses. The breakdown of the total production cost is shown in Table 13.x.
Table 13.4: Breakdown of Total Production Cost

TOTAL PRODUCTION COST
Production Cost Cost in Php
MANUFACTURING COST
Direct Production Cost
25,221,551.
Raw Materials
76
16,435,767.
Operating Labor
63
2,876,259.
Direct Supervisory (17.5% of OL)
34
18,116,983.
Utilities (15% of TPC)
95
6,033,418.
Maintenance and Repairs (6% of FCI)
79
754,177.
Operating Supplies (0.75% of FCI)
35
2,465,365.
Laboratory Charges (15% of OL)
14
3,623,396.
Patents (3% of TPC)
79
75,526,920.75
Fixed Charges
Depreciation 1,318,065.96
2,513,924.
Local Taxes (2.5% of FCI)
50
703,898.
Insurance (0.7% of FCI)
86
4,535,889.31
Plant Overhead Cost (10% of TPC) 12,077,989.30
Monolith mic 61
Total Manufacturing Cost 92,140,799.36

GENERAL EXPENSES
Administrative Cost 3,801,816.
(15% of Labor, Supervision & Maintenance) 86
13,285,788.
Distribution and Selling Cost (11% of TPC)
23
6,038,994.
Research and Development Cost 5% of TPC)
65
5,512,493.
Financing (5% of TCI)
90
Total General Expenses 28,639,093.65
TOTAL PRODUCTION COST (Php) 120,779,893.01
Source: Plant Design and Economics, 4th Edition, by Peters and Timmerhaus (1991), p. 210
Note: OL = Operating Labor Cost FCI = Fixed Capital Investment

TPC = Total Production Cost TCI = Total Capital Investment
The breakdown of the total production cost was detailed as follows:

I. MANUFACTURING COST
I-A. Direct Production Cost
Direct Costs such as the raw material and operating labor costs are
calculated based from its computed values. On the other hand, Direct
Supervisory and Laboratory Charges account for 17.5% and 15% of the
operating labor cost, respectively. Also, Maintenance & Repairs and Operating
Supplies accounts for 6% and 0.75% of the fixed capital investment,
respectively. Moreover, Utilities and Patents account for 15% and 3% of the
total production cost respectively.
I-A-1. Cost of Major and Minor Raw Materials

The cost of the raw materials in the year 2024 or when the plant will
start its operation will be computed using the purchasing power of peso for
the base year (2019) and for the year specified (2024). The following formula
will be used.
Monolith mic 62
PPP 2019
CostofRawMaterials2024 =CostofRawMaterials2019 ×
PPP 2024
Major Raw Material
The major raw materials used by GeoLith Inc. are the coal fly ash,
ceramic tile wastes and spent bleaching earth which will be supplied by the
Pozzolanic Philippines Inc., Mariwasa Siam Philippines and Lepanto Ceramics
Inc., and lastly is San Pablo Manufacturing Corporation.
Since ceramic tile waste and spent bleaching earth are considered
waste in their respective industries, the raw materials will be purchased for
Php50 per sack or 50kg (Php1/kg) for packaging purposes. Also, the
transportation cost for the collection of the raw material will be shouldered
by GeoLith Inc. without getting any compensation from the supplier. On
the other hand, coal fly ash will be purchased at Php 3.5 per kg. The cost of
these raw materials are summarized in Table 12.x.
Table 12.XX Projected Cost of Major Raw Materials
Requirement Projected
Total
(kg) Php/k Total
Raw Annual
Source g Annual
Material Dail Cost
Yearly (2019) Cost
y (2019)
(2024)
Pozzolanic
Coal Fly 4,80 1,440,0 5,040,000. 5,808,813.
Philippines 3.5
Ash 0 00 00 56
Inc.
Mariwasa
Siam
Ceramic
Philippines 3,33 1,000,8 1,000,800. 1,153,464.
Tile 1
and 6 00 00 41
Waste
Lepanto
Ceramics Inc.
Spent San Pablo
Bleachin Manufacturin 500 150,000 1 150,000.00 172,881.36
g Earth g Corporation
7,135,159
Total Projected Cost of Major Materials in 2024
.32
Monolith mic 63
Minor Raw Materials
The minor raw materials to used by GeoLith Inc. are in Table 6.XX
which will be supplied by Himmel Industries Inc. located at Pinamucan Ibaba,
Batangas.
The agreement between the supplier and the company for the minor
raw materials is that the cost of transportation will be shouldered by GeoLith,
Inc. The cost of the minor raw materials are summarized in Table 12.x.
Table 6.XX Projected Cost of Minor Raw Materials

Requirement Total
Projected
Raw (kg) Php/kg Annual
Source Total Annual
Material (2019) Cost
Daily Yearly Cost (2024)
(2019)
Isopropano 225,00
750 19.08 4,293,000 4,947,864.41
l 0
Sodium 805.5 241,66
Himmel 20.2 4,881,694 5,626,358.73
Hydroxide 6 8
Industries
Sodium
Inc.
734.5 220,36
29.5 6,500,856 7,492,512.00
Silicate 6 8
Hydrogen
4.88 1,464 11.65 17,056 19,657.30
Peroxide
18,086,392
Total Projected Cost of Major Materials in 2024
.43
Sample Calculation for Hydrogen peroxide:

PPP 2019
Cost of Raw Materials 2024 =Cost of Raw Materials2019 ×
PPP 2024
0.68
Cost of Raw Materials 2024 =17,056× =PHP 19,657.30
0.59
The total amount for direct cost for raw material is the sum of major
raw material of Php 7,135,159.32 and the minor raw materials of Php
18,086,392.43, which is Php 25,221,551.76
I-A-2. Operating Labor Cost
Monolith mic 64
Operating labor cost is the sum of all wages paid to employees as well
as the cost of the employee benefits and payroll taxes paid by an employer.
The cost of labor is divided into direct and indirect costs. Direct costs include
wages for the employees physically making a product while the indirect costs
are associated with support labor. Table 13.X shows the summary of projected
annual operating labor costs.
Sample Calculation:
To calculate the projected annual labor costs for the year 2024,
IC 2024
PAC 2024 =TAC 2019 ( IC 2019 )
Where:
IC2024 = Index of Compensation for Year 2024
IC2019 = Index of Compensation for Year 2019
PAS2024 = Projected Annual Labor Cost for Year 2024
TAS2019 = Total Annual Labor Cost for Year 2019
For CEO position,
Annual Basic Salary=12 × Present Monthly Salary=12 × PhP80,000=PhP 960,000
Total Annual Labor Cost = Annual Basic Salary+ SSS+ PhilHealth+ PAG−IBIG+13 th Month Pay
Total Annual Labor Cost =960,000+14504.40+13,200+19,200+ 80,000
Total Annual Labor Cost =PhP 1,086,904.40
PAC 2024 =PhP1,086,904.40 ( 2239.61

1724.71 )
=PhP 1,411,392.04
Monolith mic 65
Table 13.X Projected Operating Labor Cost in Php

Annual Employer
EMPLOYEES Prese Total Annual Projected
Contribution 13th Total
nt Annua Night Annual
Month Annual
No Salary l Basic Diferent PhilHeal PAG- Labor Cost
Position SSS(1) Pay Labor Cost
. (2019) Salary ial th (2) IBIG(3) (2024)
Executive Department
960,00 14,504.4 19,20 1,086,904.4
Chief Executive Officer 1 80,000 - 13,200 80,000 1,411,392.04
0 0 0 0
240,00 14,504.4
Executive Secretary 1 20,000 - 3,300 4,800 20,000 282,604.40 366,973.95
0 0
Production Department
480,00 14,504.4
Plant Manager 1 40,000 - 6,600 9,600 40,000 550,704.40 715,113.31
0 0
672,00 29,008.8 13,44
Production Supervisor 1,2 2 28,000 - 9,240 56,000 779,688.80 1,012,459.39
0 0 0
336,00 14,504.4
Production Supervisor 3 1 28,000 33,600 4,620 6,720 28,000 423,444.40 549,860.74
0 0
540,00 29,008.8 10,80
Control Room Engineer 1,2 2 22,500 - 7,425 45,000 632,233.80 820,982.74
0 0 0
270,00 14,504.4
Control Room Engineer 3 1 22,500 27,000 3,713 5,400 22,500 343,116.90 445,552.03
0 0
270,00 - 14,504.4
Maintenance Engineer 1 22,500 3,713 5,400 22,500 316,116.90 410,491.37
0 0
234,00 - 14,504.4
Pollution Control Officer 1 19,500 3,218 4,680 19,500 275,901.90 358,270.47
0 0
234,00 - 14,504.4
Safety Engineer 1 19,500 3,218 4,680 19,500 275,901.90 358,270.47
0 0
528,00 - 39,374.4 10,56
Process Operators 1,2,3,4 4 11,000 7,260 44,000 629,194.40 817,035.95
0 0 0
264,00 19,687.2
Process Operators 5,6 2 11,000 26,400 3,630 5,280 22,000 340,997.20 442,799.51
0 0
228,00 17,035.2
Warehouse Personnel 1,2 2 9,500 - 3,300 4,560 19,000 271,895.20 353,067.59
0 0
114,00
Warehouse Personnel 3 1 9,500 11,400 8,517.60 1,650 2,280 9,500 147,347.60 191,337.19
0
Geopolymerization of Coal Fly Ash, Ceramic Tile Wastes and Spent Bleaching Earth for the Production of Economic
Sodium Aluminoslicate Monolith 66
Quality Assurance Department

336,00 14,504.4
Quality Assurance Head 1 28,000 4,620 6,720 28,000 389,844.40 506,229.69
0 0
384,00 29,008.8
Laboratory Analyst 1,2 2 16,000 5,280 7,680 32,000 457,968.80 594,692.15
0 0
192,00 14,504.4
Laboratory Analyst 3 1 16,000 19,200 2,640 3,840 16,000 248,184.40 322,278.10
0 0
Research and Development (R&D) Department
336,00 14,504.4
R&D Head 1 28,000 4,620 6,720 28,000 389,844.40 506,229.69
0 0
192,00 14,504.4
R&D Staff 1 16,000 2,640 3,840 16,000 228,984.40 297,346.08
0 0
Finance Department
372,00 14,504.4
Finance Manager 1 31,000 5,115 7,440 31,000 430,059.40 558,450.60
0 0
204,00 14,504.4
Accountant 1 17,000 2,805 4,080 17,000 242,389.40 314,753.04
0 0
192,00 14,504.4
Auditor 1 16,000 2,640 3,840 16,000 228,984.40 297,346.08
0 0
168,00 12,495.6
Payroll Clerk 1 14,000 2,310 3,360 14,000 200,165.60 259,923.63
0 0
Human Resources Department
324,00 14,504.4
Human Resources Manager 1 27,000 4,455 6,480 27,000 376,439.40 488,822.73
0 0
Human Resources 360,00 27,240.0
2 15,000 4,950 7,200 30,000 429,390.00 557,581.35
Representative 0 0
180,00 13,620.0
Company Nurse 1 15,000 2,475 3,600 15,000 214,695.00 278,790.68
0 0
228,00 17,035.2
Security Staff 1,2 2 9,500 3,300 4,560 19,000 271,895.20 353,067.59
0 0
114,00
Security Staff 3 1 9,500 11,400 8,517.60 1,650 2,280 9,500 147,347.60 191,337.19
0
114,00
Company Driver 1 9,500 8,517.60 1,650 2,280 9,500 135,947.60 176,533.80
0
228,00 17,035.2
Utility Personnel 1,2 2 9,500 3,300 4,560 19,000 271,895.20 353,067.59
0 0
114,00
Utility Personnel 3 1 9,500 11,400 8,517.60 1,650 2,280 9,500 147,347.60 191,337.19
0
Supply Chain Management Department

324,00 14,504.4
Supply Chain Manager 1 27,000 4,455 6,480 27,000 376,439.40 488,822.73
0 0
228,00 14,504.4
Purchasing Officer 1 19,000 3,135 4,560 19,000 269,199.40 349,566.98
0 0
Customer Service 192,00 14,504.4
1 16,000 2,640 3,840 16,000 228,984.40 297,346.08
Representative 0 0
180,00 13,620.0
Marketing Strategist 1 15,000 2,475 3,600 15,000 214,695.00 278,790.68
0 0
336,00 24,991.2
Sales Representative 2 14,000 4,620 6,720 28,000 400,331.20 519,847.25
0 0
Total Number of Projected Labor 16,435,767.
48
Employees Cost 63
The present annual salary of each position was used to compute for the annual salary of each position. The
number of people assigned to each position was considered in the computation. The employee benefits such as SSS,
PhilHealth, PAG-IBIG and 13th Month Pay was added to the annual salary of each position to obtain the total annual
labor cost and projected the annual labor cost for the year 2024 using the indices of compensation for 2019 and
2024. Therefore, the total number of employees and the total operating labor cost is 48 people and PhP
16,435,767.63, respectively
I-B. Fixed Charges

Fixed charges including Local Taxes, and Insurance are calculated from
the Fixed Capital Investment amounting to 2.5% and 0.7% respectively.
Depreciation cost was calculated using different formulas such as Straight-
Line, Sinking Fund, Double Declining, etc.
I-B-1. Depreciation Cost

Depreciation, as a non-cash expense, is a reduction in the value of an
asset with the passage of time, due in particular to wear and tear. Some of
the fixed assets such as machinery and equipment are depreciated in terms
of its value for some time since as most assets age, they decline in value.
Depreciation of these materials is due to their decrease in economic life.
Determining the amount of the depreciation of the tangible assets, four

methods were used, namely: (1) Straight Line Method, (2) Double
Declining Balance Method, (3) Sinking Fund Method and (4) Sum of
the Years Digit Method. Depreciation method that will give the highest
value is chosen, so that worst possible scenario in equipment condition will
be considered in the computation of other financial aspect.
From Peters and Timmerhaus (1991), p. 271, the estimated economic

or service life of manufacturing equipment is 12 years. Furthermore,
according to Federal tax regulations, ten (10) percent of the initial value (V) is
the scrap value (Vs), 8.5% interest (for sinking fund) and depreciable year (a)
of 10 years, the unit and total annual purchased equipment depreciation are
summarized in Table 6.31.
1. Straight Line Method

From Peters and Timmerhaus (1991), p. 278, in the straight-line
method for determining depreciation, it is assumed that the value of
the property decreases linearly with time. Equal amounts are charged
for depreciation each year throughout the entire service life of the
Monolith mic 69
property. The annual depreciation cost may be expressed in equation

form as follows:
V −Vs
d=
n
Where:
 d = Depreciation each year
 V = Cost of Equipment (Book Value)
 Vs=Salvage Value
 n = Economic Life
Sample Calculation:
V −V s
d a (double roll crusher)=
n
438,709.68−0.10( 438,709.68)
12
d a (double roll crusher)=PHP 32,903.23/ year
2. Declining Balance (or Fixed Percentage) Method

From Peters and Timmerhaus (1991), p. 280, when the declining-
balance method is used, the annual depreciation cost is a fixed
percentage of the property value at the beginning of the particular
year. The fixed-percentage (or declining-balance) factor remains
constant throughout the entire service life of the property, while the
annual cost for depreciation is different each year. Under these
conditions, the depreciation cost for the first year of the property’s life
is Vs, where f represents the fixed-percentage factor.
a
V a=V (1−f )
Depreciation factor can be computed using the formula,

1
V
f =1− s
V ( ) n
Thus, the annual depreciation is,

Monolith mic 70
1 a
d a=
V −V a
=
V −V (( ) )
Vs
V
n
n n
Where:
 V=Cost of Equipment (Book Value)
 n=Economic Life
 f=Depreciation rate
 a=Depreciable year
Sample Calculation:
1 a

V −V (( ) ) Vs
V
n
n
1 10
438,709.68−438,709.68 ( ( 0.1 ) ) 12
12
d a (double roll crusher)=PHP 31,192.99/ yea r
3. Sinking Fund Method
The Sinking Fund Method was computed using the equation below.
d=(V −V s)
[ i
( 1+ i )n−1 ]
Where:
 d=Depreciation year
 V=Cost of Equipment (Book Value)
 n=Economic Life
 i=Annual interest
Sample Calculation:
d (doube roll crusher)=(V −V s)

[ i
( 1+i )n−1 ]
d (double roll crusher)=( 438,709.68−0.1 ( 438,709.68 ) )
[ 0.085
( 1+0.085 )12 −1 ]
Monolith mic 71
d (double roll crusher)=¿ PHP 20, 197.13/ year
4. Sum of the Years Digits
The Sum of the Years Digit was computed using the equation below.
d=(V −V s)
[ 2(n−a+1)
n(n+1) ]
Sample Calculation:
d (double roll crusher )=( V −V s ) [ 2( n−a+1)

n (n+1) ]
d (Washing Conveyor)=(438,709.68−0.1 ( 438,709.68 ) ) [ 2(12−10+1)
12(12+1) ]
d (double roll crusher)=PHP 15,186.10/ year
The summary of annual depreciation of each equipment at using

different methods is summarized on Table 6.31.
Table 6.32 Summary of Depreciation of Equipment
Projected DEPRECIATION
Cost Per
Total Cost
Equipmen Double-
Equipment Per Straight- Sinking Sum of
t-PHP Declining
Equipmen Line Fund the Year
(2019) Balance
t (2022)
Process Equipment
Coal Fly Ash
1 100,000.00 109,677.42 8,225.81 7,798.25 5,049.28 3,796.53
Silo
Pneumatic 10,098.5
2 200,000.00 219,354.84 16,451.61 15,596.50 7,593.05
Conveyor 1 6
Double Roll 20,197.1 15,186.1
3 400,000.00 438,709.68 32,903.23 31,192.99
Crusher 3 0
Belt
4 82,000.00 89,935.48 6,745.16 6,394.56 4,140.41 3,113.15
Conveyor
20,197.1 15,186.1
5 Ball Mill 400,000.00 438,709.68 32,903.23 31,192.99
3 0
Pneumatic 10,098.5
6 200,000.00 219,354.84 16,451.61 15,596.50 7,593.05
Conveyor 2 6
7 Isopropanol 110,000.00 120,645.16 9,048.39 8,578.07 5,554.21 4,176.18
Storage
Monolith mic 72
Tank
Batch
1,866,634. 2,047,276. 153,545.7 145,564.7 94,251.6 70,867.2
8 Leaching
00 00 0 5 2 5
Tank
Agitated
25,246.4 18,982.6
9 Nutsche 500,000.00 548,387.10 41,129.03 38,991.24
1 3
Filter
Pneumatic 10,098.5
10 200,000.00 219,354.84 16,451.61 15,596.50 7,593.05
Conveyor 3 6
Rotary 12,976.6
11 257,000.00 281,870.97 21,140.32 20,041.50 9,757.07
Dryer 6
Pneumatic 10,098.5
12 200,000.00 219,354.84 16,451.61 15,596.50 7,593.05
Conveyor 4 6
Ribbon 26,256.2 19,741.9
13 520,000.00 570,322.58 42,774.19 40,550.89
Blender 7 4
Pneumatic 10,098.5
14 200,000.00 219,354.84 16,451.61 15,596.50 7,593.05
Conveyor 5 6
Sodium
Silicate
15 110,000.00 120,645.16 9,048.39 8,578.07 5,554.21 4,176.18
Storage
Tank
Water
16 Storage 150,000.00 164,516.13 12,338.71 11,697.37 7,573.92 5,694.79
Tank
Sodium
Hydroxide
17 105,000.00 115,161.29 8,637.10 8,188.16 5,301.75 3,986.35
Dilution
Tank
Hydrogen
Peroxide
18 95,000.00 104,193.55 7,814.52 7,408.34 4,796.82 3,606.70
Dilution
Tank
Batch
1,866,634. 2,047,276. 153,545.7 145,564.7 94,251.6 70,867.2
19 Stirred Tank
00 00 0 5 2 5
Reactor
Double Belt
37,364.6 28,094.2
20 Laminating 740,000.00 811,612.90 60,870.97 57,707.04
9 9
Conveyor
Steam
1,500,000. 1,645,161. 123,387.1 116,973.7 75,739.2 56,947.8
21 Curing
00 29 0 2 3 9
Chamber
Steam
19,692.2 14,806.4
22 Curing 390,000.00 427,741.94 32,080.65 30,413.17
0 5
Tunnel
Electric
1,041,935. 47,968.1 36,067.0
23 Steam 950,000.00 78,145.16 74,083.36
48 8 0
Boiler
12,220,552 916,541.4 868,901.6 562,604. 423,019.
Total Process Equipment Cost .00 0 9 55 11
Wastewater Treatment Equipment

1 Flow 62,500.00 68,548.39 5,141.13 4,873.90 3,155.80 2,372.83
Equalization
Monolith mic 73
Basin
Neutralizati
2 on Contact 88,250.00 96,790.32 7,259.27 6,881.95 4,455.99 3,350.43
Basin
Sedimentati
3 44,216.00 48,494.97 3,637.12 3,448.07 2,232.59 1,678.67
on Tank
Aeration
4 54,458.00 59,728.13 4,479.61 4,246.77 2,749.74 2,067.51
Basin
Trickling 30,388.7 22,849.1
5 601,842.21 660,085.00 49,506.38 46,933.15
Filter 1 0
Final
6 44,216.00 48,494.97 3,637.12 3,448.07 2,232.59 1,678.67
Clarifier
Total Wastewater Treatment 982,141.7 73,660.6 69,831.9 45,215.4 33,997.2
Equipment Cost 8 3 2 2 2
Auxiliary Equipment
Cargo Truck 3,094,965.8 142,484.7 107,133.4
1 2,821,880.60 232,122.44 220,057.25
(4 units) 2 1 3
Minor Raw
Materials 26,458.2 19,893.8
2 524,000.00 574,709.68 43,103.23 40,862.82
Truck (1 4 0
unit)
Forklift (2 32,311.1 24,294.5
3 639,916.11 701,843.48 52,638.26 49,902.25
units) 7 8
Total Auxiliary Equipment 4,371,518. 327,863.9 310,822.3 201,254. 151,321.
Cost 97 2 1 12 81
TOTAL EQUIPMENT COST in 2020 TOTAL DEPRECIATION COST (Php)
1,318,065 1,249,555 809,074. 608,338.
₱17,574,212.75 .96 .92 09 13
The chosen method in determining the annual depreciation of the

equipment is Straight Line Method since it yields the maximum cost for
annual depreciation with an amount of PHP 1,318,065.96. Choosing the
maximum cost for annual depreciation can cover all the possible amount of
annual depreciation that may happen.
Monolith mic 74
ANNUAL SALES
For GeoLith, Inc., it is expected to sell 80% of its annual rated plant
capacity of 31,200 sodium aluminosilicate monolith panels and 4,617,600
(1,050,960kg) cylindrical monolith adsorbent on its starting year. The
remaining 20%, called as unsold goods, was considered as the company’s
finished goods inventory that is added to succeeding year sales.
A. Selling Price
For estimation of the selling price, the equation below will be used:
Estimated Sale> Expenses
Selling Price× RPC ×%Sales> Total Cost of Production
Where:
 RPC = Rated Plant Capacity
 Selling Price = Selling price of panels and adsorbent
The selling price of panel and cylindrical adsorbent is based on the

costs involved in the manufacturing of the product. From Table 13.x, the
computed total cost of production is Php 120,779,893.01. However, there are
two production lines in the manufacturing of sodium aluminosilicate monolith:
70% of the plant rated capacity is for panels and the remaining 30% is for
cylindrical adsorbent. Thus, the production cost will be divided into 70/30
ratio resulting to Php 84,545,925.11 for panels and Php 36,233,967.90
for cylindrical adsorbents.
Calculating for the selling price of panel,

ProductionCost for Panel
Selling Priceof Panel>
Rated Plant Capacity∗%Sales
Php 84,545,925.11
Selling Priceof Panel>
[ ( 31,200 panel ) ]∗0.80
Selling Priceof Panel> Php3,387.26 per panel
Actual Selling Price of GeoLith Inc. Php 4,000
Geopolymerization of Coal Fly Ash, Ceramic Tile Wastes and Spent
Bleaching Earth for the Production of Sodium Aluminoslicate Economic
75
Monolith Study
Panel
Existing Selling Price of Panel Php 3,500 – 4,500
Calculating for the selling price of cylindrical adsorbent,
Production cot for Adsorbent
Selling Priceof Adsorbent>
Rated Plant Capacity∗%Sales
Php 36,233,967.90
Selling Priceof Adsorbent>
1,050,960 kg∗0.80
Selling Priceof Adsorbent> Php 43.10 per kg
Actual Selling Price of GeoLith Inc. Php 110 per kg
Adsorbent
Existing Selling Price of Adsorbent Php 60-200 per kg
The selling price of GeoLith, Inc. sodium aluminosilicate monolith is

Php 4,000 per panel and Php 110 per kilogram adsorbent.
B. Annual Sales
The total annual sales of the company is computed by multiplying the
capacity of the plant by the selling price of the product. As a starting
company, it is assumed that only 80% of the produced monolith is sold.
For panels,
Total Annual Sales of Panel=Rated Plant Capacity x Selling price x %sales
Php 4.000
Total Annual Sales of Panel=31,200 panel x x 0.80
panel
Total Annual Sales of Panel=Php 99,840,000.00
For adsorbent,
Total Annual Sales of Adsorbent=Rated Plant Capacity x Selling price x %sales
Php 110
Total Annual Sales of Adsorbent=1,050,960 kg x x x 0.80
kg
Total Annual Sales of Adsorbent=Php 92,484,480.00
Thus, the total annual sales is,

Total Anual Sales=Php 99,840,000.00+ Php 92,484,480.00

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Monolith Study
Total Anual Sales=Php192,324,480.00
C. Inventory
The remaining 20% in the production will be treated as additional

inventory that will be sold on the following year.
Finished Goods Inventory =Rated Plant Capacity∗Selling Price∗( 1−%sales )
[
Inventory= 31,200 panel x
Php 4,000
panel ][
x ( 1−0.80 ) + 1,050,960 kg x
Php110
kg
x (1−0.80 ) ]
Inventory=Php 48,081,120.00
The summary of production cost, plant rated capacity, selling price,

and annual sales of sodium aluminosilicate monolith panels and adsorbent is
shown in the table below.
Table 13.x. Summary of Annual Sales
PANELS ADSORBENTS TOTAL

Total 70% of TPC 30% of TPC
Php
Production Php
Php 36,233,967.90 120,779,893.01
Cost (TPC) 84,545,925.11
70% of RPC 30% of RPC
Rated Plant 31,200 pcs.
4,617,600 pcs 3,503,280 kg
Capacity (RPC) panels
2,452,320 kg 1,050,960 kg
Sales 80% 80%
Inventory 20% 20%
Computed Php 3,387.26 -
Php 43.10 per kg
Selling Price per panel
Actual Selling Php 4,000
Php 110 per kg
Price per panel
Php Php
Annual Sales Php 92,484,480.00
99,840,000.00 192,324,480.00
Php Php
Inventory Php 23,121,120.00
24,960,000.00 48,081,120.00
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Monolith Study
SOURCES OF FINANCING
The total capital needed for the establishment of GeoLith Incorporated
for the production of sodium aluminosilicate monolith amounts to Php
200,000,000.00, which is the sum of the total capital investment, start-up
expenses and 45% of the total production cost for the sustainability of the
operation, and allowances for excess and contingency funds.
The total fund needed will come from the company owners’ share and
a bank loan from Metropolitan Bank and Trust Company (Metrobank).
GeoLith Inc. and Metrobank have mutually agreed to a financing mix of
40%/60% in which the bank will shoulder 40% (equivalent to Php
80,000,000.00) of the total initial investment while the remaining 60%
(equivalent to Php 120,000,000.00) will be coming from the shareholder’s
capital as presented in Table 13.x.
Table 12.51: Shareholders Capital of GeoLith Incorporated

PROFIT
SHAREHOLDER CONTRIBUTION
SHARE
Engr. Renzo C. Macasil ₱ 18,000,000.00 15%
Engr. Anne Paulinne P. Redublo ₱ 18,000,000.00 15%
Engr. Amabelle C. Santos ₱ 18,000,000.00 15%
Engr. Clark Ivan V. Torres ₱ 18,000,000.00 15%
Engr. Charles P. Dionisio ₱ 4,800,000.00 4%
Engr. Justine L. Fulugan ₱ 4,800,000.00 4%
Engr. Marian D. Mendoza ₱ 4,800,000.00 4%
Engr. Karl D. Raymundo ₱ 4,800,000.00 4%
Engr. Mikho Saligue ₱ 4,800,000.00 4%
Engr. Diana Jane S. Saya ₱ 4,800,000.00 4%
Engr. Marco C. Sarmiento ₱ 4,800,000.00 4%
Engr. Bren A. Sison ₱ 4,800,000.00 4%
Engr. Annalyn C. Yepes ₱ 4,800,000.00 4%
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Monolith Study
Engr. Lara B. Yumul ₱ 4,800,000.00 4%

₱
TOTAL 100%
120,000,000.00
The total share capital (Php 120,000,000.00) will be used to finance

the following expenses, as presented in Table 13.x.
Table 13.x: Issuances of Share Capital
ISSUANCE OF SHARE CAPTIAL Cost (Php)

Site Construction (2020)
Land 1,943,553.38
Buildings 30,826,230.77
Service Facilities 6,721,303.60
Company Registration 1,285,714.29
Indirect Cost 30,967,374.42
Equipment Acquisition (2022)

Purchased Equipment 12,220,552.00
Purchased Wastewater Treatment Equipment 982,141.78
Purchased Auxiliaries 4,371,518.97
Piping and Instrumentation (2022)

Purchased Piping Elements 2,075,732.97
Instrumentation and Process Controls 2,199,699.36
Electrical Equipment 1,527,569.00
Installation, Insulation, and Painting 4,888,220.80
Auxiliaries and Yard Improvements (2022)

Yard Improvements 1,833,082.80
Production Cost (2024)

Local Taxes and Insurances 3,217,823.36
Cash, Ending 14,939,482.51
Total Share Capital 120,000,000.
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00
These issuances, upon receiving by GeoLith Inc., will be used as

collateral to get a loan of Php 80,000,000.00 from the Metrobank in 2022.
On the other hand, the Php 80,000,000.00 to be loaned from the bank
will be used to finance the following expenses, as presented in Table 13.x.
Table 13.x: Issuance of Bank Loan
ISSUANCE OF BANK LOAN Cost (Php)

Recruitment, Orientation & Training of
Employees (2023) 3,801,816.86
Startup Expenses (2023)
Acquisition of Raw Materials & Chemicals for Start-
up 2,522,155.18
Start-Up Operation 12,077,989.30
Production Cost (2024)
Acquisition of Raw Materials and Chemicals 25,221,551.76
Patents 3,623,396.79
Laboratory Charges 2,465,365.14
Maintenance and Repairs 6,033,418.79
Distribution & Selling of Product 13,285,788.23
Research & Development 6,038,994.65
Cash, Ending 4,929,523.30
Total Bank Loan 80,000,000.00
The loan from the bank will be primarily used for recruitment and
training of employees in January 2023, start-up operation expenses in
November 2023, and for the production cost. The detailed usage of loan from
bank is shown in drawdown schedule in Table 13.x.
A. TERMS AND CONDITIONS OF THE METROBANK
The term given by Metropolitan Bank and Trust Company is ten (10)
years, inclusive of four (4) years grace period. GeoLith Inc. will apply for

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Monolith Study
the loan worth Php 80,000,000.00 in the year 2022, a year before the target
drawdown (January 2023).
The loan is classified as long-term-loan. For this, interest will be 6.50

% fixed rate per annum. The amortization will start after 4 years which
would be on 2026. The payment will be done monthly. In addition to terms
discussed above, the bank has set collateral conditions which are:
Collateral Condition:
1. Real mortgage on land, buildings, service facilities, equipment,

auxiliaries, piping elements, instruments, controls, and electrical
equipment to be installed in Sta. Teresita, Batangas;
2. Chattel mortgage on delivery trucks and forklifts acquired;
3. To secure its obligations under the loan, borrower will issue the stock in
the name of lender. The stock will serve to collateralize the loan and
will contain restrictions on assignment and transfer.
(a) Projects for the establishments:
(b) Receivables from customers;
(c) Bonds of all contractors; and
4. Insurances during construction and operation.
5. Debt service reserve account covering at least one (1) amortization for
the duration of the loan.
Other Conditions
1. Metrobank-Credit Appraisal and Management’s (MB-CAM) report on the
valuation/validation of the total project cost;
2. Engagement by GeoLith Inc. of the services of SEC-accredited external
auditor, starting with its 2022 financial statements;
3. Establishment of a Debt Service Reserve Account covering at least one
(1) amortization of principal and interest for the duration of the loan
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82
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MODES OF PAYMENT
The bank and the company has agreed to have a 10-year contract
wherein the loan would be amortized monthly with 4 years grace period for
the first four years. The company would pay the interest and the principal
amount monthly for a period of 6 years starting 2026. The interest will be
fixed at 6.5% rate per annum. The payment will start on the January 27,
2026, and will be continued every month thereafter.
Sample Computation:
Since the payment is deferred for four (4) years from 2022-2025, the
total annual payment (annuity) from 2026-2031 is computed as:
k+n
1+i¿ i
¿
1+i ¿n−1
¿
P¿
Annuity ( A)=¿
where:
 P = principal amount (Php 80,000,000)
 i = interest rate (6.5%)
 k = deferred time (4)
 n = no. of periods (6)
Substituting the known values,

1+0.065 ¿4 +6 (0.065)
¿
1+ 0.065 ¿6−1
¿
80,000,000 ¿
Annuity( A)=¿
A=Php 21,259,454.62

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Monolith Study
For six consecutive years (2026-2031), the total annual payment of

GeoLith Inc. to Metrobank is Php 21,259,454.62, which is equal to a grand
total of Php 127,556,727.75.
Moreover, this annual payment will be divided into 12 equal payments per
month. The monthly amortization is computed as:
Php 21,259,454.62
Monthly Ammortization=
12 months
Monthly Ammortization=Php 1,771,621.22
Calculating for the total interest,

Interest=Pin Interest=( Php 80,000,000,000 ) ( 0.065 ) (6 )
Interest=Php 31,200,000
Thus, per month, the interest would be:
Php5,200,000 Php 433,333.33

Interest= ∨
year month
Also, the base payment is the difference between the monthly amortization
and the monthly interest,
Base Payment =P hp1,338,287.89 per month
The figure below shows the cash flow diagram, the orange arrow is the loan
received, while the green arrow of the annuity to be paid divided equally into
12 monthly payments of Php 1,771,621.22.

84
Monolith Study
The present worth (2022) was also calculated to determine how much of the
original principal loan of Php 80,000,000.00 was already paid.
Present Worth=S
[ ] 1
( 1+i )n
where:
 S = amount after n years

 i = interest rate
 n = number of periods
For example, at 2026, which is the 5th loan period, the present worth is:
Present Worth (2022)=Php 21,259,454.62

[ 1
( 1+0.065 )5 ]
Present Worth ( 2022 )=Php15,516,868.53

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Monolith Study
PAYMENT Present Worth New

MONTHLY AMORTIZATION (Php)
SCHEDULE (2022) ANNUITY Principal
Yea Mont Da Base / Principal (Php) Loan
Interest TOTAL
r h y Payment Paid Balance
202
1st Deferred Year
2
202
2nd Deferred Year
3
202
3rd Deferred Year
4
202
4th Deferred Year
5
Jan 27 1,338,287.89 433,333.33 1,771,621.22
Feb 27 1,338,287.89 433,333.33 1,771,621.22
Mar 27 1,338,287.89 433,333.33 1,771,621.22
Apr 27 1,338,287.89 433,333.33 1,771,621.22
May 27 1,338,287.89 433,333.33 1,771,621.22
202 Jun 27 1,338,287.89 433,333.33 1,771,621.22 127,556,727.
15,516,868.53 21,259,454.62
6 Jul 27 1,338,287.89 433,333.33 1,771,621.22 75
Aug 27 1,338,287.89 433,333.33 1,771,621.22
Sept 27 1,338,287.89 433,333.33 1,771,621.22
Oct 27 1,338,287.89 433,333.33 1,771,621.22
Nov 27 1,338,287.89 433,333.33 1,771,621.22
Dec 27 1,338,287.89 433,333.33 1,771,621.22
202 Jan 27 1,338,287.89 433,333.33 1,771,621.22 14,569,829.60 21,259,454.62 106,297,273.
7 Feb 27 1,338,287.89 433,333.33 1,771,621.22 12
Geopolymerization of Coal Fly Ash, Ceramic Tile Wastes and Spent Bleaching Earth for the
Production of Sodium Aluminoslicate Monolith Economic Study 86
Mar 27 1,338,287.89 433,333.33 1,771,621.22

Apr 27 1,338,287.89 433,333.33 1,771,621.22
May 27 1,338,287.89 433,333.33 1,771,621.22
Jun 27 1,338,287.89 433,333.33 1,771,621.22
Jul 27 1,338,287.89 433,333.33 1,771,621.22
Aug 27 1,338,287.89 433,333.33 1,771,621.22
Sept 27 1,338,287.89 433,333.33 1,771,621.22
Oct 27 1,338,287.89 433,333.33 1,771,621.22
Nov 27 1,338,287.89 433,333.33 1,771,621.22
Dec 27 1,338,287.89 433,333.33 1,771,621.22
Jan 27 1,338,287.89 433,333.33 1,771,621.22
Feb 27 1,338,287.89 433,333.33 1,771,621.22
Mar 27 1,338,287.89 433,333.33 1,771,621.22
Apr 27 1,338,287.89 433,333.33 1,771,621.22
May 27 1,338,287.89 433,333.33 1,771,621.22
202 Jun 27 1,338,287.89 433,333.33 1,771,621.22 85,037,818.5
13,680,591.17 21,259,454.62
8 Jul 27 1,338,287.89 433,333.33 1,771,621.22 0
Aug 27 1,338,287.89 433,333.33 1,771,621.22
Sept 27 1,338,287.89 433,333.33 1,771,621.22
Oct 27 1,338,287.89 433,333.33 1,771,621.22
Nov 27 1,338,287.89 433,333.33 1,771,621.22
Dec 27 1,338,287.89 433,333.33 1,771,621.22
202 Jan 27 1,338,287.89 433,333.33 1,771,621.22 12,845,625.52 21,259,454.62 63,778,363.8
Feb 27 1,338,287.89 433,333.33 1,771,621.22

Mar 27 1,338,287.89 433,333.33 1,771,621.22
Apr 27 1,338,287.89 433,333.33 1,771,621.22
May 27 1,338,287.89 433,333.33 1,771,621.22
Jun 27 1,338,287.89 433,333.33 1,771,621.22
9 Jul 27 1,338,287.89 433,333.33 1,771,621.22 7
Aug 27 1,338,287.89 433,333.33 1,771,621.22
Sept 27 1,338,287.89 433,333.33 1,771,621.22
Oct 27 1,338,287.89 433,333.33 1,771,621.22
Nov 27 1,338,287.89 433,333.33 1,771,621.22
Dec 27 1,338,287.89 433,333.33 1,771,621.22
Jan 27 1,338,287.89 433,333.33 1,771,621.22
Feb 27 1,338,287.89 433,333.33 1,771,621.22
Mar 27 1,338,287.89 433,333.33 1,771,621.22
Apr 27 1,338,287.89 433,333.33 1,771,621.22
May 27 1,338,287.89 433,333.33 1,771,621.22
203 Jun 27 1,338,287.89 433,333.33 1,771,621.22 42,518,909.2
12,061,620.20 21,259,454.62
0 Jul 27 1,338,287.89 433,333.33 1,771,621.22 5
Aug 27 1,338,287.89 433,333.33 1,771,621.22
Sept 27 1,338,287.89 433,333.33 1,771,621.22
Oct 27 1,338,287.89 433,333.33 1,771,621.22
Nov 27 1,338,287.89 433,333.33 1,771,621.22
Dec 27 1,338,287.89 433,333.33 1,771,621.22
Jan 27 1,338,287.89 433,333.33 1,771,621.22

Feb 27 1,338,287.89 433,333.33 1,771,621.22
Mar 27 1,338,287.89 433,333.33 1,771,621.22
Apr 27 1,338,287.89 433,333.33 1,771,621.22
May 27 1,338,287.89 433,333.33 1,771,621.22
203 Jun 27 1,338,287.89 433,333.33 1,771,621.22 21,259,454.6
11,325,464.98 21,259,454.62
1 Jul 27 1,338,287.89 433,333.33 1,771,621.22 2
Aug 27 1,338,287.89 433,333.33 1,771,621.22
Sept 27 1,338,287.89 433,333.33 1,771,621.22
Oct 27 1,338,287.89 433,333.33 1,771,621.22
Nov 27 1,338,287.89 433,333.33 1,771,621.22
Dec 27 1,338,287.89 433,333.33 1,771,621.22
127,556,727.7 127,556,727.7
80,000,000.00 0.00
5 5
Table 13.x shows the amortization schedule wherein the monthly payment of GeoLith Inc. to Metropolitan
Bank and Trust Company (Metrobank) for a period of 6 years from 2026-2031 is presented. The total bank loan of
GeoLith Inc. is Php 80,000,000.00. Since this amount must be paid back within 10 years, deferred by 4 years,
GeoLith Inc. must pay an amortization of Php 1,771,621.22 every month or an annuity of Php 21,259,454.62. An annual
interest rate of 6.5% was given by the bank and this is equivalent to 0.5416% interest rate per month. The
drawdown of the loan was scheduled on the November 2023 and with a 4-year grace period, the start of the interest
and principal payment will be on January 27, 2026. The annual interest expense was accounted in the income
statement as well as in the discounted cash flow. An overall amount of Php 127,556,727.75 must be paid by the
company to the bank to return back the Php 80,000,000.00 principal and to finance the required interest expense.
DRAWDOWN SCHEDULE
SHAREHOLDER'
BANKLOAN
ISSUANCE OF S CAPITAL
ACTIVITIES COST
INVESTMENT 80,000,000.0
120,000,000.00
0
2020
Land Purchasing 1,943,553.38 118,056,446.62
Application of Business Permit and Registration 1,285,714.29 116,770,732.33
Hiring of Contractor for Plant Construction 5,567,168.43 111,203,563.90
Hiring of Engineers for Supervision of Plant 12,178,180.9 From
99,025,382.95
Construction 5 Shareholder's
Preparation for Construction (Indirect Cost) 6,263,064.49 Capital 92,762,318.46
Allocation of Fund for Contingencies during
6,958,960.54 85,803,357.91
Construction
Administrative Building Construction 6,684,923.08 79,118,434.84
2021
Quality Control Building 1,485,538.46 77,632,896.38
18,124,615.3
Product Storage Warehouse From 59,508,280.99
8
Shareholder's
Raw Material Warehouse 4,531,153.85 54,977,127.15
Capital
Service Facilities Installation
6,721,303.60 48,255,823.55
(Water, Electric, Fire Protection)
2022
12,220,552.0 From
Purchasing and Delivery of Process Equipment 36,035,271.55
0 Shareholder's
Purchasing and Delivery of Wastewater Treatment Capital
982,141.78 35,053,129.77
Equipment
Purchasing and Delivery of Auxiliary Equipment 4,371,518.97 30,681,610.79
Purchasing and Delivery of Piping Materials 2,075,732.97 28,605,877.82
Process Equipment and Piping Installation 4,888,220.80 23,717,657.02
Purchasing and Installation of Instrumentation and

2,199,699.36 21,517,957.66
Control Equipment
Electrical Equipment Installation 1,527,569.00 19,990,388.66
Yard Improvement 1,833,082.80 18,157,305.86
2023
From Bank
Recruitment and Hiring of Employees
Loan
2,144,156.07 77,855,843.93
1st
Orientation and Training of Hired Employees
Drawdown:
Acquisition of Raw Materials and Chemicals for Start- ₱16,744,300.5
2,522,155.18 75,333,688.75
up 5
12,077,989.3
Start-Up Operation 63,255,699.45
0
2024
Acquisition of Raw Materials and Chemicals for Actual 25,221,551.
38,034,147.69
Production 76
3,623,396.7 From Bank
Application of Patents 34,410,750.90
9 Loan
2,465,365.1 2nd
Laboratory Charges during Production Drawdown: 31,945,385.76
4
6,033,418.7 ₱56,668,515. 25,911,966.9
Maintenance and Repairs during Production
9 36 7
13,285,788. 12,626,178.7
Product Advertising and Marketing
23 4
6,038,994.6
Research and Development 6,587,184.08
5
3,217,823.3 14,939,482.51
Paying of Taxes and Insurance
6
TOTAL CASH LEFT: 6,587,184.08 14,939,482.51
21,526,666.59
The drawdown schedule shows the usage of loan from bank. The 1st drawdown will be on 2023 wherein a
total of ₱16,744,300.55 will be used for recruitment and training of employees, and to finance the startup
operation of the plant. Moreover, the 2nd drawdown will be on 2024 wherein ₱56,668,515.36 (equivalent to
approximately 45% of the cost of production) will be used for the sustainability of the operation. From a total of
200M capital investment, the total amount of Php 21,526,666.59 was left and will be included in the company’s
assets for 2025.
FINANCIAL STATEMENTS
The financial statements are formal records of the financial activities
and position of the company. These reports usually include statement of
financial position, income statement, statement of cash flow, and statement
of changes in equity.
I. Balance Sheet
The balance sheet, also known as statement of financial position,
reports on the company's assets, liabilities, and owners’ equity at a given
point in time. Table 13.xx shows the statement of financial position of the
company, which consists of all the assets and liabilities of the company for
the year 2024. It is evident that the cost of total assets is equal to the cost of
the total liabilities and equities of the company.
II. Income Statement
The income statement, also known as a statement of comprehensive
income, statement of revenue and expense, profit and loss report, presents
the company's income, expenses, and profits over a period of time. This
statement, as shown in Table 13.xx, provides information on the operation of
the company, and includes sales and the various expenses incurred during
the stated period. The net income or earned money for the said year will be
used as the new budget to finance the expenses of the company for the next
year operation.
III. Discounted Cash Flow Statement
The statement of cash flow reports on the company's cash flow
activities, particularly its operating, investing, and financing activities as
shown in Table 13.xx. With the ending cash balance presented, the company
can still supply its need in order to pay its obligations and use the other cash
available for other purchases and operations, and thus, can still finance itself
for future operation and manufacturing.

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Monolith Study
Table 13.XX Balance Sheet of GeoLith Inc. For Year 2024
BALANCE SHEET
As of December 31, 2024
ASSETS LIABILITIES
Current Assets Current Liabilities
101,086,885.5
Annual Sales 9 Taxes 10,155,201.83
Inventory 84,733,200.00
185,820,085.
Total Fixed Assets 59
Long-Term
Fixed Assets Liabilities
13,2
Purchased Equipment 02,693.78 Loan Payable 80,000,000.00
Purchased Equipment
Installation 4,888,220.80
Instrumentation and TOTAL
Controls 2,199,699.36 LIABILITIES 90,155,201.83
Piping 2,075,732.97
Electrical Equipment
and Materials 1,527,569.00
Buildings 30,826,230.77
Yard Improvement 1,833,082.80
Service Facilities 6,721,303.60
Land 1,943,553.38
Company Registration 1,285,714.29 OWNER'S EQUITY

Accumulated
Depreciation -1,318,065.96 Share Capital 120,000,000.00
Purchased Auxiliaries 4,371,518.97 Retained Earnings 23,695,470.93

Cash, Ending 21,526,666.59
Total Fixed Assets
69,557,253.7

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Monolith Study
TOTAL
255,377,339. LIABILITIES AND 255,377,339.3
TOTAL ASSETS 35 EQUITIES 5
Analysis on the Balance Sheet
Balance Sheet consists of total assets and total liabilities of the

company for end of the year 2024. In this case, the total asset of GeoLith Inc.
is Php 255,377,339.35. This includes current assets and fixed assets. Current
assets include cash on hand and finished goods inventory. Fixed asset
involved land, buildings, equipment, piping system, electrical,
instrumentation and process control. On the other hand the total liabilities
and equities of the company is also Php 255,377,339.35, these liabilities
include loans, capital and common stock.
Table 13.XX Income Statement of GeoLith Inc. For Year 2024
INCOME STATEMENT
(December 31, 2024)
197,710,80
Sales 0.00
Cost of Goods 96,623,914.
Sold 41
101,086,88
Gross Profit 5.59
Expenses
12,718,180.
Engineering and Supervision 95
6,263,064.4
Construction Expenses 9
5,567,168.4
Contractor's Fee 3
6,958,960.5
Contingency 4

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Monolith Study
3,801,816.8
Administrative Expenses 6
Distribution, Marketing, and 13,258,788.
Selling Expenses 23
Research and Development 6,038,994.6
Expenses 5
12,077,989.
Start-up Expense 30
Financing Expenses (Front-End
Fee) 551,249.39
67,236,21
Total Expenses 2.84
Net Income 33,850,672.

Before Taxes 75
Income Tax (10,155,201.
Expense 83)
Net Income for 23,695,470.

the Year 93
Analysis of the Income Statement
The income statement of GeoLith Inc. for year 2024 shows the
earnings of the company and as well as its expenses for the whole year. The
net operating income is calculated as the sum of total annual sales
subtracted by the costs of goods sold, expenses, and taxes. The net income
of the company is Php 23,695,470.93 from its annual sales of PhP
197,710,800.00.
Table 13.XX Cash Flow Statement of GeoLith Inc. For Year 2024

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CASH FLOW STATEMENT
As of December 2024
Plant Rated PAMANTASAN
Capacity NG LUNGSOD Panels
NG(pcs)
MAYNILA
University of the City of Manila 31,200.00
Adsorbents 1,050,960.00
College of Engineering and (kg) Technology
Selling Price Department of Chemical Engineering
Panels 4000.00
Adsorbents 150.00
Percent Sales 70%
Depreciation 1,318,065.96
CASH INFLOW
197,710,800.
Annual Sales 00
80,000,000.0
Loan Proceeds 0
120,000,000.
Share Capital 00
397,710,800
Total Cash Inflow .00
CASH OUTFLOW
1,943,55
Land 3.38
1,285,71
Company Registration 4.29
67,646,052.0
Property, Plant, and Equipment 5
12,718,18
Engineering and Supervision 0.95
6,263,06
Construction Expenses 4.49
5,567,16
Contractor's Fee 8.43
6,958,96
Contingency 0.54
25,221,551.7
Direct Material 6
16,435,767.6
Direct Labor 3
Manufacturing Overheads 1,207,798.93
Administrative Expenses 3,801,816.86
Distribution, Marketing, and Selling 13,258,788.2
Expenses 3
Research and Development Expenses 6,038,994.65
12,077,989.3
Start-up Expense 0
551,24
Financing Expenses (Front-End Fee) 9.39
Loan Payment -
10,155,201.8
Income Tax Expense 3
191,131,852
Total Cash Outflow .71
206,578,94
Net Cash Balance 7.29
Cash, at the Beginning of theTile

Year
Geopolymerization of Coal Fly Ash, Ceramic Wastes and Spent Economic - 97
Bleaching Earth for the Production of Sodium Aluminoslicate 206,578,94
MonolithCash at the End of the Year Study
7.29
120,779,89
Cost of Goods Manufactured 3.01
96,623,91
Cost of Goods Sold 4.41
101,086,88
DISCOUNTED CASH FLOW

The discounted cash flow estimates and analyzes the attractiveness of
the investment. This analysis uses future cash flow projections and discounts
them to arrive at the net present value estimate, which is used to evaluate
the potential for investment. To project the future cash flows, the discounted
interest rate (d) must first be calculated using the annual interest rate (i)
given by the bank.
i
d= x 100
1+i
0.065
d= x 100
1+0.065
d=6.10
This discounted interest rate together with the number periods (N),
with 2024 as base year, will then be used to calculate the present value
factor (PVF), which will be used to determine the net present value estimate.
1
PVF 2024 = ×100
(1+i ) N
1
PVF 2024 = ×100
(1+0.0654 )1
PVF 2024 =93.90
The PVF will be multiplied to the cash at the end of the year found in
Table 13.XX to estimate the net present value. The net present value (NPV) of
a project or investment reflects the degree to which cash flow exceeds the
amount of investment capital required to fund it. A higher net present value
indicates that the project or investment is more profitable. The NPV for the
year 2024 can be calculated as follows.
NPV 2023 =(Cash at the End of the Year)(PV F 2023 )

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NPV 2023 =(Php 240,300,110.74)(1.000)

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NPV 2023 =Php243,300,110.74 Table 13.XX Discounted Cash Flow of GeoLith Inc.
Year
Discounted Cash Flow
2024 2025 2026 2027 2028 2029
Panels 31 4
Plant Rated Capacity (pcs) ,200.00 0,560.00 50,700.00 60,840.00 69,966.00 76,962.60
Adsorbent 1,05 1,3 1,7 2,0 2,3 2,5
s (kg) 0,960.00 66,248.00 07,810.00 49,372.00 56,777.80 92,455.58
Selling Price Panels 4000.00 4000.00 4000.00 4200.00 4200.00 4200.00
Adsorbent
s 150.00 150.00 150.00 150.00 150.00 150.00
Percent Sales 70% 75% 80% 85% 90% 95%
1,3 1,3 1,3 1,3 1,3
Depreciation 1,318,065.96 18,065.96 18,065.96 18,065.96 18,065.96 18,065.96
Cash Inflow
197,71 275,3 367, 478, 582,6 676,5
Annual Sales 0,800.00 82,900.00 177,200.00 493,730.00 36,483.00 05,694.15
80,00
Loan Proceeds 0,000.00 - - - - -
120,00
Share Capital 0,000.00 - - - - -
397,71 275,3 367,1 478,4 582, 676,
Total Cash Inflow 0,800.00 82,900.00 77,200.00 93,730.00 636,483.00 505,694.15
Cash Outflow
1,94
Land 3,553.38 - - - - -
1,28
Company Registration 5,714.29 - - - - -
Property, Plant, and 67,646,052.05
Equipment - - - - -
12,71
Engineering and Supervision 8,180.95 - - - - -
6,26
Construction Expenses 3,064.49 - - - - -
5,56
Contractor's Fee 7,168.43 - - - - -
6,95
Contingency 8,960.54 - - - - -
26,860,952.6
28,606,914.54 30,466,363.99 32,446,677.65 34,555,711.70
Direct Material 25,221,551.76 2
17,504,092.5
18,641,858.54 19,853,579.35 21,144,062.00 22,518,426.03
Direct Labor 16,435,767.63 3
Manufacturing Overheads 1,207,798.93 1,286,305.86 1,369,915.74 1,458,960.26 1,553,792.68 1,654,789.21
Administrative Expenses 3,801,816.86 4,048,934.96 4,312,115.73 4,592,403.25 4,890,909.46 5,208,818.58
Distribution, Marketing, and 14,120,609.4
15,038,449.08 16,015,948.27 17,056,984.91 18,165,688.93
Selling Expenses 13,258,788.23 6
Research and Development
6,431,529.30 6,849,578.71 7,294,801.32 7,768,963.41 8,273,946.03
Expenses 6,038,994.65
Start-up Expense 12,077,989.30 - - - - -

Financing Expenses (Front- 551
End Fee) ,249.39 - - - - -
21,259,454.62 21,259,454.62 21,259,454.62 21,259,454.62

Loan Payment - -
46,292,666.0
10,155,201.83 69,415,139.15 97,973,686.40 123,923,485.16 146,295,679.81
Income Tax Expense 2
191,131,852. 116,545,090 165,493,426.1 198,915,197.4 230,044,329. 257,932,514.
Total Cash Outflow 71 .75 1 6 89 90
206,57 158,8 201,6 279,5 352, 418,
Net Cash Balance 8,947.29 37,809.25 83,773.89 78,532.54 592,153.11 573,179.25
Cash, at the Beginning of 206,5 365,4 567,1 846, 1,199,
the Year - 78,947.29 16,756.54 00,530.43 679,062.97 271,216.08
Cash at the End of the 206,57 365,4 567,1 846,6 1,199, 1,617,
Year 8,947.29 16,756.54 00,530.43 79,062.97 271,216.08 844,395.33
Present Value Factor 1.0000 0.9390 0.8817 0.8278 0.7773 0.7299
Future Value Factor 1.0000 1.0650 1.1342 1.2079 1.2865 1.3701
Net Present Value 206,57 343,1 499,9 700,9 932, 1,180,

(Discounted Cash Flow) 8,947.29 14,325.39 89,446.92 22,493.33 221,208.50 833,620.63
120,77 128,6 136, 145, 155,3 165,4
Cost of Goods Manufactured 9,893.01 30,586.06 991,574.15 896,026.47 79,268.19 78,920.62
96,62 96,4 109, 124, 139,8 157,2
Cost of Goods Sold 3,914.41 72,939.54 593,259.32 011,622.50 41,341.37 04,974.59
101,08 178,9 257, 354, 442,7 519,3
Gross Profit 6,885.59 09,960.46 583,940.68 482,107.50 95,141.63 00,719.56
33,85 154,3 231, 326, 413,0 487,6
Income Before Tax 0,672.75 08,886.74 383,797.17 578,954.66 78,283.85 52,266.03
23,69 108,0 161,9 228,6 289, 341,
Income After Tax 5,470.93 16,220.71 68,658.02 05,268.26 154,798.70 356,586.22
Rate of Return Before Tax 28.21%

Rate of Return After Tax 19.75%
Breakeven Point Panel 67.75%
Adsorbent 22.98%
Payout Period (years) 4.80
ANALYSIS OF THE DISCOUNTED CASH FLOW

Table 13.XX presents the discounted cash flow of GeoLith Inc. for the
years 2024 to 2029. Within this 6-year span, the plant rated capacity with its
corresponding selling price was increasing based on the future value factor
for the years 2024 to 2029. The plant rated capacity accounts for the finished
goods inventory from the previous year of production. On the other hand,
since the percent sale is increasing, it can be expected that the cost of goods
sold would also increase. A present value factor was used in computing the
net present value of the net cash balance in each year while a future value
factor was used in projecting the cost of the cash outflow from the direct
material up to the research and development expenses.
The cash inflow is composed of the annual sales, loan proceeds, and
share capital. The cash outflow, on the other hand, is composed of investing
and operations activities. Included in the cash outflow as well is the interest
expense, principal loan payment, and income tax expense which is 30%
(Philippine Domestic Corporate Tax) of the net income before tax. The cash at
the beginning and at the end of the year was accounted to determine
whether the company has sufficed amount to finance the future years of
operation. It was observed that the cash at the end of the year is significantly
higher than the cost of goods sold which means that the company can
sustain its future operations.
The profitability indicators were also presented in Table 11.57. This

include the net present value, gross profit, net profit, rate of return,
breakeven point, and payout period. An increasing net present values, a high
rate of return (19.75%), a relatively low breakeven point (67.75% and 22.98%
for panels and adsorbents respectively) and a considerable payout period
(4.80 years) were observed from the previously presented table. Thus, it can
be accepted that the proposed company is economically sound and feasible.

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ANALYSIS OF THE DISCOUNTED CASH FLOW

1. Gross and Net Profit
Gross Profit= Annual Sales – Cost of Goods Sold

Gross Profit=192,324,480 – 96,623,914.41
Gross Profit=Php 95,700,565.59
Income Before Tax=Gross Profit – Total Expenses

Income Before Tax =95,700,565.59 – 67,236,212.84
Income Before Tax=P28,464,352.75
Income After Tax=Income Before Tax – Income Tax

Income After Tax=Php 24,016,108.24 – 8,593,305.83
Income after tax=Php 19,925,046.93
2. Rate of Return
Rate of Return (ROR), also called as Return of Investment, refers to
either gain or loss of an investment over a specified period, expressed as a
percentage increase over the initial investment cost. Gains on investments
are considered to be any income received plus any capital gains realized on
the sale of the investment. Rate of return (ROR) on investment is expressed
on an annual percentage basis. It is the yearly profit before tax divided by the
total initial investment necessary, multiplied by one hundred. The following
formula will be used to compute for the rate of return on investment before
and after income tax.
ROR Before Tax:
Income Before Tax
ROR Before Tax= × 100
Total Initial Investment of theOwners

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Monolith Study
Income Before Tax

ROR Before Tax= × 100
Share Capital
28,464,352.75
ROR Before Tax= ×100
120,000,000.00
ROR Before Tax=23.72
ROR After Tax:

Income After Tax
ROR After Tax= × 100
Share Capital
19,925,046.93
ROR After Tax= ×100
120,000,000.00
ROR After Tax=16.60
3. Break-even Point
The break-even point for a product is the point at which cost or
expenses and revenue are equal; there is no net loss or gain which means
that the profit is equal to zero. Similarly, it is where the total cost of goods
manufactured equals the total sales.
Total Cost of Goods Manufactured=Total Sales
Total Cost of Goods Manufactured=( Selling Price ) x ( N )
Total Cost of Goods Manufactured
N=
Selling Price
84,545.925.11
N panel =
Php 4000
N panel =21,136.48 panel/ year
36,233,967.90
N cylinder =
Php110
N cylinder =329,399.7082 kg / year

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N panel
BEP panel =
Plant Rated Capacity
21,136.48
BEP=
31,200.00
BEP panel =67.75
N cylinder
BEP cylinder =
Plant Rated Capacity
329,399.7082
BEP=
1,050,960
BEP=31.34
This percentage implies that at least 67.75% of the plant rated capacity
of panel and 31.34% of the cylindrical monolith must be manufactured and
sold to breakeven the cost allotted in producing the product.
4. Payout Period
Payout period, or payout time, is the minimum length of time
theoretically necessary to recover the original capital investment in the form
of cash flow to the project based on the total income minus all costs except
depreciation. The following formula will be used according to Granger et al.
(2000), The Best Test Preparation & Review Course FE/EIT Fundamentals of
Engineering/engineer-in-training:
Total Investment of theOwners
Payout Period =
Ave . Profit per Annum + Ave . Depreciation per Annum
120,000,000.00
Payout Period =
19,925,046.93+ 1,318,065.96
Payout Period =5.65 years
Payout Period ≈ 5 years∧8 months

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107
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ECONOMIC STUDY CONCLUSION

108
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OVERALL CONCLUSION

109
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RECOMMENDATIONS

110
Monolith Study

13C05 Economic Study

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PAMANTASAN NG LUNGSOD NG MAYNILA

University of the City of Manila

The data on the Purchasing Power of Peso (PPP) and compensation

The company had analyzed the total manufacturing costs of the

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

OBJECTIVES OF THE ECONOMIC STUDY

To determine the economic feasibility of manufacturing sodium

 To determine the purchasing power of peso and index of compensation

 To calculate the total capital investment, total production cost, and

 To develop a profitability analysis by calculating the net profit, rate of

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

Figure 13.1 Economic Study Framework

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

ANALYSIS OF ECONOMIC STUDY FRAMEWORK

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

BACKGROUND OF THE COMPANY

Before starting a company, there are several analysis to conduct to

B. Mayor’s Business Permit

E. Social Security System (SSS), PhilHealth, and HDMF/ PAG-IBIG

Form of Business Ownership

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

Figure 13.2 Divisional Organizational Chart

Figure 13.3 Functional Organizational Chart

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

I-1. Chief Executive Officer

I-2. Executive Secretary

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

II. TECHNICAL DIVISION

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

II-A. Production Department

2. Control Room Engineers

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

 Calibrating the process control devices to ensure that it is

 Implement hazard control and safety programs

5. Pollution Control Officer

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

 Maintains inventory controls by collecting stock location

II-B. Quality Assurance Department

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

 Ensuring cleanliness, good manufacturing practices and

2. Research and Development Staf

III. ADMINISTRATION DIVISION

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

The administration division comprises of Finance Department, Human

III-A. FINANCE DEPARTMENT

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

There is one auditor in the company. His responsibilities include:

III-B. HUMAN RESOURCE DEPARTMENT

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

 Supervising different department functions and managing

2. Human Resource Representative

 Providing basic health services to the employees

 Ensuring the cleanliness in the plant

III-C. SUPPLY CHAIN MANAGEMENT DEPARTMENT

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

 Responsible for the preparation and process purchase orders and

3. Customer Service Representative

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

 Ensuring that all purchased items are delivered to the customers in

In total, GeoLith Incorporated has only 48 employees since it is a

QUALIFICATIONS AND PRESENT MONTHLY SALARY OF COMPANY

Geopolymerization of Ceramic Waste, Coal Fly Ash, and Spent

Safety Licensed Chemical 1 to 2