A.

Inventory Management

Paghiusa Cooperative shall use hybrid inventory management system for its inventories.

Both Just-in-Time (JIT) approach and Traditional approach shall be used. JIT shall be applicable

when there are orders of Malunggay leaves from customers. Leaves, not intended for the

production of powdered leaves are only harvested from the farms when there are orders.

These cannot be held as stock for inventory because it is prone to damage for just a short span

of time. Thus, leaves not intended for production when harvested, are considered as final

products. On the other hand, traditional approach shall be used for the production of

powdered Malunggay leaves. The cooperative will purchase its raw materials to the different

farmers who are under an agreement to the cooperative to supply Malunggay leaves every

month at the scheduled harvest period. No Work-in-process inventory shall be held by the firm.

In one production run, it is assumed that raw materials are converted into powdered leaves.

Seeds purchased for the plantation shall be classified as raw materials. As it grows, it

shall be revalued and shall be reclassified as biological asset. Moreover, after the harvest, the

leaves shall be transferred to inventory in accordance to IAS 2. Decayed leaves shall be used as

an organic fertilizer. These fertilizers shall be recognized as an asset and shall be later charged

to cost of goods sold. Also, if there is market for these fertilizers in the future, the cooperative

considers in classifying these as a byproduct.

Alternative Sources of Financing

Membership Fees

This is the amount that shall be received from regular and associate members as

mandated by the cooperative. Corresponding fee that shall be paid by the members is

stated in the by-laws of the cooperative. These shall be used in the operating activities

of the cooperative.

Long-term loan

This is the amount to be borrowed from banking institutions that shall be used as a

starting capital of the cooperative. This is usually utilized to finance the acquisition of

building and property plant and equipments. Normally, this debt shall be due in more

than one operating cycle or beyond one year. The cooperative shall take into accounts

in making loans at rural banks such as ABP and Land Bank which lend credits to

agribusiness.

Short-term loan

This is the amount to be borrowed from banking institutions that will be used in

financing operating, selling and administrative expenses. This loan usually has a maturity

of one year or less. The cooperative shall take into accounts in making loans at rural

banks such as ABP and Land Bank which lend credits to agribusiness.
Line of Credit

This is the amount arranged between banking institutions that the cooperative is

allowed to withdraw at anytime. The withdrawal of the cooperative is considered the amount

borrowed. But the cooperative cannot withdraw in excess of its limit. Only the amount

borrowed could be subject to the interest. This serves as the emergency fund of the

cooperative.

Subsidies

This is the amount received from different sources, either foreign or government aids. This

represent as a financial aid to agribusiness sectors. This amount shall be used in the operating

activities of the cooperative.

Paid-up Share Capital

This is the amount that shall be received from members upon acquiring shares from the

subscribed share capital. Each member acquires one share for the equivalent par value.
Sources of Financing the Project

The project will be financed as follows:

Short-term Debt 920,000.00

Long-term Debt 4,170,000.00
Total Cost 5,090,000.00

Only Short-term and Long-term debt shall be considered in financing the total project cost. The cash that

has been received from the members for the membership fees and paid-up capital shall be retained as

cash available for the month of January. Subsidies that the cooperative shall receive cannot be

determined. Also, no available information is present to justify any assumptions. Line of credit financing

shall be used in the future activities of the entity when the branding of the cooperative is already

established.
Revenue Cycle

The cooperative assumes that all sales that shall be made are in cash to cash basis.

Office Personnel

The office personnel-in-charge receives and handles the purchase order sent by customers. Before

converting the purchase order into sales order, the availability of raw materials shall be checked and the

customer must pay first the corresponding bill. If the bill is already paid, a duplicate of the sales order

shall be issued. One for filing and the other one shall be given to the sales clerk through fax. Summary of

sales order are then made by the office personnel.

Sales Clerk

By the time he receives the copy of the sales order, the sales clerk shall inform the plant manager that

an order has been made. When inventory is ready for release, the sales clerk shall reconcile it with the

sales order. The collection officer shall send a triplicate of the sales invoice to the sales clerk through

fax. The triplicate sales invoice has three colors (white, blue, pink). Before inventory is released, the

sales clerk shall hand out the copy of sales order and the triplicate of the sales invoice to the delivery

man.

Plant Manager

The plant manager commands for production and logs a record for the sales order.
Delivery Man

The delivery man receives the copy of sales order and the triplicate of the sales invoice from the sales

clerk. Upon released of the inventory, he shall give and present the sales invoice (pink) to the guard for

reconciliation. He delivers the goods to the customer. The sales invoice shall be given to the customer

for signature. Then, he shall give the original copy of sales invoice (white) and the copy of sales order to

the customer. The last copy of sales invoice (blue) shall be sent to collection officer for filing.

Guard

The guard shall reconcile the inventory released with the sales invoice received (pink) to ensure that all

released inventories have been paid. Upon release of the inventory, he shall keep a log record.

Collection Officer

The collection officer receives the checks of customers as their payment. After receiving these checks, a

triplicate of sales invoice shall be issued to the sales clerk through fax. Then, the collection officer shall

prepare summary of all sales invoices and collections. The amount collected is then deposited at the

bank. When deposit slips are received, he shall prepare summary of deposit slips. After all these

summaries of sales invoices, collections and deposits are made, it shall be remitted to the accountant.

Accountant /Bookkeeper

The accountant files all summary of sales order, sales invoices, collection and deposit slips for recording

transactions.

Office Manager

The office manager is in-charge in preparing bank reconciliation.

Appendix. Banks to consider for borrowing the Short-term and Long-term debts

A. The cooperative shall borrow its short-term loan from the Landbank of the Philippines.
B. The cooperative shall borrow its long-term loan from Development bank of the Philippines