ANNUAL OPERATING COST OF THE EXISTING SYSTEM

I. SALARIES AND WAGES

Annual Cost
Position Number of Staff Salary/Month
per System

Manager 1 15,000.00 180,000.00

Stock Man 1 10,000.00 120,000.00
Staff 1 10,000.00 120,000.00
Total 420,000.00

II. DEPRECIATION OF FURNITURES, MACHINES, & EQUIPMENT

Annual Depreciation Cost = (Cost of Unit * No. of Unit) - Salvage Value
Life Expectancy

ITEMS Cost of Unit No. of Units Life Expectancy Salvage Value Annual
Depreciation
Air conditioner 9,000.00 1 5 20% 1,440.00
Full body mannequin 3,000.00 4 3 20% 3,200.00
Calculators 1,750.00 2 8 20% 350.00
Clothes Rail 2,000.00 6 5 20% 1,920.00
Electric Fan 1,700.00 2 5 20% 544.00
Total 7,454.00

III. OFFICE SUPPLIES

Items Monthly Expenses Annual Expenses
5 ballpens ( P20 @ ) 500.00 6,000.00
3 record books ( P 50 @) 150.00 1,800.00
3 reams short bond paper (P250 @) 750.00 9,000.00
3 reams long bond paper (P300 @) 900.00 10,800.00
20 pcs. folder ( P3 @) 60.00 720.00
2 pcs.staplers ( P 50 @) 100.00 1,200.00
* Other Supplies 2,000.00 24,000.00
Total 53,520.00
*List all office supplies that the company used in the existing system

IV. ELECTRICITY
kWh/day= [(unit watts * no. of hrs. used/day) * no. of units / 1000]
kWh/month = kWh/day * no. of working days /month

Wattage Hours No. of Units Days kWh/month

Airconditioner 200 10 1 26 52
Electric Fan 80 10 2 26 41.6
Light Bulb 10 10 4 26 10.4

Total Monthly Power Consumption 104

* Basic Charge 102.20

Energy ( kWh) First 40 17.40
Next 80 1.74 139.20
Next (16) 3.4 (54.40)

Currency Adjustment 102.20 5.83% 5.96

PPA 104 1.985 206.44
Total Monthly Electricity Consumption 314.60
* Computation is based on the Meralco bill. Update the PPA and Currency Adjustment.

TOTAL ANNUAL ELECTRICITY CONSUMPTION 3,775.18

V. MISCELLANEOUS
MISCELLANEOUS EXPENSES *Assumed only 72,000.00

SUMMARY:
SALARIES & WAGES 420,000.00
DEPRECIATION OF FURNITURE, MACHINES & EQUIPMEN 7,454.00
OFFICE SUPPLIES 53,520.00
ELECTRICITY 3,775.18
MISCELLANEOUS 72,000.00
ANNUAL OPERATING COST OF EXISTING SYSTEM P 556,749.18
 ANNUAL OPERATING COST OF THE PROPOSED SYSTEM

I. SALARIES AND WAGES

Annual Cost
Position Number of Staff Salary/Month
per System

Manager 1 15,000.00 180,000.00

Staff 1 10,000.00 120,000.00
0.00
0.00
Total 300,000.00

II. DEPRECIATION OF FURNITURES, MACHINES, & EQUIPMENT

Annual Depreciation Cost = (Cost of Unit * No. of Unit) - Salvage Value
Life Expectancy

ITEMS Cost of Unit No. of Units Life Expectancy Salvage Value Annual
Depreciation
Clothes Rail 2,000.00 6 5 20% 1920.00
Electric Fan 1,700.00 2 5 20% 544.00
Computer Package 30000.00 1 5 20% 4800.00
Full body mannequin 3,000.00 4 3 20% 3,200.00
Air conditioner 9,000.00 1 5 20% 1,440.00
Printer 6000.00 1 5 20% 960.00
Total 12,864.00

III. OFFICE SUPPLIES

Items Monthly Expenses Annual Expenses
3 ballpen ( P20 @ ) 60.00 720.00
3 reams short bond paper (P250 @) 750.00 9,000.00
4 bundle of receipt paper (P50 @) 200.00 2,400.00
0.00
0.00
0.00
0.00
Total 12,120.00
*List all office supplies that the company used in the existing system

IV. ELECTRICITY
kWh/day= [(unit watts * no. of hrs. used/day) * no. of units / 1000]
kWh/month = kWh/day * no. of working days /month
 Wattage Hours No. of Units Days kWh/month
Airconditioner 200 10 1 26 52
Electric Fan 80 10 2 26 41.6
Light Bulb 10 10 4 26 10.4
Computer 100 10 1 26 26
Total Monthly Power Consumption 130

* Basic Charge 190.60

Energy ( kWh) First 40 17.40
Next 80 1.74 139.20
Next 10 3.4 34.00

Currency Adjustment 190.60 5.83% 11.11

PPA 130 1.985 258.05
Total Monthly Electricity Consumption 459.76
* Computation is based on the Meralco bill. Update the PPA and Currency Adjustment.

TOTAL ANNUAL ELECTRICITY CONSUMPTION 5,517.14

V. AMORTIZATION OF SOFTWARE COST

Software Cost 25,000.00
Amortization Cost 5,000.00
*Amortization of Software Cost means of distributing the software cost over the years benefited

VI. MISCELLANEOUS
MISCELLANEOUS EXPENSES *Assumed only 72,000.00

SUMMARY:
SALARIES & WAGES 300,000.00
DEPRECIATION OF FURNITURE, MACHINES & EQUIPMEN 12,864.00
OFFICE SUPPLIES 12,120.00
ELECTRICITY 5,517.14
AMORTIZATION OF SOFTWARE COST 5,000.00
MISCELLANEOUS 72,000.00
ANNUAL OPERATING COST OF PROPOSED SYSTEM P 407,501.14
 BREAKDOWN OF COST (Development & Investment)

I. Development Cost

A. Hardware for Development

Depreciated
Life Salvage
Equipment Quantity Initial Amount Amount per
Expectancy Value
Month
Pentium II 450 1 31000 3 20% 688.89
Epson 440 Printer 1 5000 3 20% 111.11
TOTAL MONTHLY HARDWARE DEPRECIATED COST 800.00
TOTAL HARDWARE DEPRECIATED COST for 3 MONTHS 2400.00

B. Software for Development

Depreciated
Software Cost Life Expectancy Salvage Value Amount per
Month
Windows 98 3000 3 20% 66.67
MS Office 2000 4000 3 20% 88.89
Visual Foxpro 3000 3 20% 66.67
TOTAL MONTHLY SOFTWARE DEPRECIATED COST 222.22
TOTAL SOFTWARE DEPRECIATED COST for 3 MONTHS 666.67

C. Labor Cost
Working
Personnel Salary No. of Staff Period Total Cost
(months)
System Developer 10,000.00 2 3 60,000.00

TOTAL LABOR COST 60,000.00

D. ELECTRICITY
kWh/day= [(unit watts * no. of hrs. used/day) * no. of units / 1000]
kWh/month = kWh/day * no. of working days /month

Wattage Hours No. of Units Days kWh/month

Fluorescent Light 40 5 1 26 5.2
Electric Fan 80 10 1 26 20.8
Printer 120 10 1 26 31.2
Computer 230 10 1 26 59.8
Total Monthly Power Consumption 117

* Basic Charge 314.80

 Energy ( kWh) First 10 17.40
Next 40 1.74 69.60
Next 67 3.4 227.80

Currency Adjustment 314.80 5.83% 18.35

PPA 117 1.985 232.25
Total Monthly Electricity Consumption 565.40
* Computation is based on the Meralco bill. Update the PPA and Currency Adjustment.

TOTAL ELECTRICITY CONSUMPTION for 3 MONTHS 1,696.19

E. Office Supplies
Expenses for 3
ITEMS
Months
2 ballpens ( P5 @ ) 10.00
1 ream short bond paper (P250 @) 250.00
1 ream long bond paper (P300 @) 300.00
1 Ink Printer ( 1100 @) 1,100.00
* Other Supplies 500.00
Total Expenses for 3 Months 2,160.00

II. Hardware Acquisition Cost

1 Pentium III (Package) (Show the breakdown of this comp. package) 30,000.00
1 HP Deskjet Printer 6,000.00
TOTAL HARDWARE ACQUISITION COST 36,000.00
*Indicate here all the hardware that the company will invest for the proposed system.

III. Software Acquisition Cost

TOTAL SOFTWARE ACQUISITION COST

*Indicate here all the software that the company will invest for the proposed system.

IV. Training Cost

Personnel Cost No. of Personnel Training Cost
 0
0
TOTAL TRAINING COST 0

SUMMARY:
DEVELOPMENT COST 66,922.86
HARDWARE ACQUISITION COST 36,000.00
SOFTWARE ACQUISITION COST -
TRAINING COST -
TOTAL INVESTMENT P 102,922.86
Project A
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total
Benefits 3,000.00 28,000.00 31,000.00 34,000.00 36,000.00 39,000.00 42,000.00
Present Value Factor 1 1.000 0.893 0.797 0.712 0.636 0.567 0.507
Present Value 3,000.00 25,004.00 24,707.00 24,208.00 22,896.00 22,113.00 21,294.00 143,222.00
Cost 60,000.00 17,000.00 18,500.00 19,200.00 21,000.00 22,000.00 23,300.00
Present Value Factor 1 1.000 0.893 0.797 0.712 0.636 0.567 0.507
Present Value 60,000.00 15,181.00 14,744.50 13,670.40 13,356.00 12,474.00 11,813.10 141,239.00
Net Present Value 1,983.00
PV formula: PV = 1/(1+i)^n
i = rate, n = no. of years

Project B
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total
Benefits 6,000.00 26,000.00 54,000.00 70,000.00 82,000.00 92,000.00
Present Value Factor 12% 0.893 0.797 0.712 0.636 0.567 0.507
Present Value 5,358.00 20,722.00 38,448.00 44,520.00 46,494.00 46,644.00 202,186.00
Cost 80,000.00 40,000.00 25,000.00 22,000.00 24,000.00 26,500.00 30,000.00
Present Value Factor 1 1.000 0.893 0.797 0.712 0.636 0.567 0.507
Present Value 80,000.00 35,720.00 19,925.00 15,664.00 15,264.00 15,025.50 15,210.00 196,808.50
Net Present Value 5,377.50
 COST-BENEFIT ANALYSIS

I. INVESTMENT
DEVELOPMENT COST 66,922.86
HARDWARE ACQUISITION COST 36,000.00
SOFTWARE ACQUISITION COST 0.00
TRAINING 0.00
TOTAL INVESTMENT P 102,922.86

II. OPERATING COST OF THE EXISTING SYSTEM

Year 1 Year 2 Year 3 Year 4 Year 5
SALARIES & WAGES 420,000.00 462,000.00 508,200.00 559,020.00 614,922.00
DEPRECIATION OF FURNITURE, MACHINES & EQUIPMENTS 7,454.00 7,454.00 7,454.00 7,454.00 7,454.00
OFFICE SUPPLIES 53,520.00 58,872.00 64,759.20 71,235.12 78,358.63
ELECTRICITY 3,775.18 4,152.70 4,567.97 5,024.76 5,527.24
MISCELLANEOUS 72,000.00 79,200.00 87,120.00 95,832.00 105,415.20
TOTAL OPERATING COST OF EXISTING SYSTEM P 556,749.18 P 611,678.70 P 672,101.17 P 738,565.88 P 811,677.07
* Costs are assumed to increased by 10 % yearly

III. OPERATING COST OF THE PROPOSED SYSTEM

Year 1 Year 2 Year 3 Year 4 Year 5
SALARIES & WAGES 300,000.00 330,000.00 363,000.00 399,300.00 439,230.00
DEPRECIATION OF FURNITURE, MACHINES & EQUIPMENTS 12,864.00 12,864.00 12,864.00 12,864.00 12,864.00
OFFICE SUPPLIES 12,120.00 13,332.00 14,665.20 16,131.72 17,744.89
ELECTRICITY 5,517.14 6,068.86 6,675.74 7,343.32 8,077.65
AMORTIZATION OF SOFTWARE COST 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00
MISCELLANEOUS 72,000.00 79,200.00 87,120.00 95,832.00 105,415.20
REPAIR & MAINTENANCE - 10,000.00 10,000.00 10,000.00 10,000.00
TOTAL OPERATING COST OF PROPOSED SYSTEM P 407,501.14 P 456,464.86 P 499,324.94 P 546,471.04 P 598,331.74
* Costs are assumed to increased by 10 % yearly

IV. PRESENT VALUE ANALYSIS 0.62 5

INVESTMENT 102,922.86
 ANNUAL NET
OPERATING OPERATING COST ANNUAL GROSS TAX EFFECTS DISCOUNT PRESENT VALUE
YEAR CASH SAVINGS /
COST (EXISTING) (PROPOSED) CASH SAVING (32%) FACTOR OF SAVINGS
FUTURE VALUE

1 556,749.18 407,501.14 149,248.04 47,759.37 101,488.66 0.91 92,354.68

2 611,678.70 456,464.86 155,213.84 49,668.43 105,545.41 0.83 87,602.69
3 672,101.17 499,324.94 172,776.22 55,288.39 117,487.83 0.75 88,115.87
4 738,565.88 546,471.04 192,094.85 61,470.35 130,624.49 0.68 88,824.66
5 811,677.07 598,331.74 213,345.33 68,270.51 145,074.82 0.62 89,946.39
TOTAL 3,390,772.00 P 2,508,093.73 P 882,678.27 P 282,457.05 P 600,221.22 P 446,844.30
Average P 120,044.24

RETURN ON INVESTMENT (ROI) 117%

TOTAL ANNUAL NET CASH SAVINGS

INVESTMENT 1 2 3 4 5
(102,922.86) 101,488.66 105,545.41 117,487.83 130,624.49 145,074.82
INTERNAL RATE OF RETURN (IRR) 102%

PAYBACK PERIOD to be recovered year months days

1 101,488.66 102,922.86 1
2 105,545.41 1,434.20 0.01 0.16 (235.11)
3 117,487.83
4 130,624.49
5 145,074.82
1 year 8 months 15 days