PAMANSALAN ECO-TECH HIGH

School Grade Level

SCHOOL
Teacher VIVRAM M. ZAMORAS Learning Area
SHS: MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY
Sch. Yr.: 2022-2023
Quarter: 1 ST

Date & Time of Engagement

Semi-detailed Lesson Plan in ENTREPRENEURSHIP 10

I. OBJECTIVES
At the end of the lesson, the students are expected to:
a. Apply the rules of production in your enterprise; and
b. Compute the cost and price of the product or service of your chosen business.

II. SUBJECT MATTER

Topic: Determining Costing and Pricing of Products and Services
Reference: Competency Based Learning Material
Materials: chalkboard, chalk, laptop

III. LEARNING EXPERIENCES

 Daily Routine
 Prayer
 Greetings
 Checking of attendance
 Review of past lesson
A. Activity
 Determine the meaning of the following words through crossword puzzle.

Capital Cost - a payment of interest for the duration of the loan

Cost - represents form of payment
Direct Cost - payment and expenditure made for the production or service that become
part of the product like acquisition of raw materials and salaries/wages of the
workers
Indirect Cost - sum of other expenses or cost generated from the business and also known
as overhead expenses
Material Cost - all materials needed both for direct manufacturing and those needed for the
functioning of the business
Production - process of making or manufacturing goods
Staff Cost - are salaries or wages plus additional costs as payments or incentive on
overtime works, social security, annual and sick leaves of workers.

B. Analysis
 What can you say about our activity? Are you familiar with it?
 Do you have any idea how much is the cost and price of the product or service you’ve chosen?
 Do you know how to compute the cost and price of a product or service?

C. Abstraction

RULES OF PRODUCTION TO AN ENTERPRISE

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

1. What will be your decision, when the TR (INCOME) of your business is equal to TC
(EXPENSES)?
 EXAMPLE: TR = TC
2,000 = 2000
DECISION: There is a need to maintain your production.

2. What will you do when the TR of your enterprise is less than to the TC?
EXAMPLE: TR = TC
5,000 = 8,000
DECISION: The production needs to stop.

3. What action do you need to take if you have greater TR than your TC?
EXAMPLE: TR = TC
10,000 = 7,000
DECISION: You have to produce more

COMPUTING THE COST OF THE PRODUCT OR SERVICE OF YOUR CHOSEN BUSINESS

The cost of the product or service is done on estimate approach. It is vital to list down and
determine the costing to make a product or to deliver a service. It does not matter how big or small your
business is. What is important is to know and estimate the cost of your production or service delivery.
There are factors that cause successful industries to fail because they are not aware of their costs.
What are the benefits if you know your costs? Look at the chart below and find out how helpful it is
to know the cost of your business:
PRODUCTION COSTS BENEFITS CHECKLIST
1 You can draft your estimates without worries.
2 You can anticipate for estimated profits.
3 You can identify the expensive and cheap materials you need.
4 You can have a chance to do the cost-cutting.
5 You can sense the improvements of your business.
Now that you know the importance of the production cost, how will you compute for your costs?
Here is how to do it:
1. List down your needed raw materials
2. Determine the other raw materials you need in the operation of your business and services
3. Specify your estimate for the needed manpower
4. Come up with the facilities and machineries required in the operation of your chosen business.
5. Survey on the quality but cheapest source of materials you need.

After completing your list, estimate for the DIRECT COST and INDIRECT COST your business is
facing. These are the two types of costs. The direct cost refers to the item which becomes part of the
products or services composing material cost, wages and benefits. The indirect costs are referring to those
items needed in running a business and are better known as overhead expenses. These are the expenses
on building, machines, maintenance, salaries, office costs, selling cost and financial cost.
The entrepreneur has many other expenses compared to the direct cost. The following is an
example of how to estimate or compute for the indirect cost:
P10,000.00
Insurance of machines/stocks 5,000.00
Maintenance of machines 20,000.00
Power and electricity 24,000.00
Rent of building 25,000.00
Salaries/Wages 60,000.00
Selling cost (transportation/representation) 20,000.00
Telephone 5,000.00
TOTAL INDIRECT COST+20 percent P169,000.00
of 169,000.00 for taxes, etc. + 33,800.00
TOTAL INDIRECT COSTS FOR THE YEAR P202,800.00
 If one product is developed by an entrepreneur for the computation of the indirect cost, the indirect
cost is simply the indirect costs divided by the calculated number of wood benches to be manufactured
during the year.
Let us say that the entrepreneur targets for 1,500 wood benches:

P202,800.00 = P135.20
1,500

Computation for the total costs:

Total direct costs per bench P380.00
Add: Total indirect costs per bench 135.20
TOTAL COST PER BENCH P515.20

The entrepreneur’s computation of the wood bench is based on 1,500 sales units for a year. If there
will be no increase in indirect costs, then the indirect cost will be:
P772, 800 = P 515.20
1,500

The total cost of the bench now becomes:

Direct cost per bench P380.00
Add: Indirect cost per bench 515.20
TOTAL COST PER BENCH P895.20

The rules of production are helpful to the entrepreneurs. These will guide him to know what and how
to decide on his production. It tells when they need to produce more, when to stop production or when to
maintain the production. Likewise, it is good for all the business enterprises to know the computation of
their production to avoid failure of business operations.

D. Application
 The students are grouped into 4. Each group performs the activity given.

I. Given the following nominal values of revenues and costs, decide whether you need to produce more,
stop your production or maintain production of goods or services. Draw an upward (↑) arrow if your answer
is to produce more; downward arrow (↓) when you need to stop and draw a smiley face (☺) when your
decision is to maintain production.
NO BUSINESS NAME TR TC ENTREPRENEUR’S
. (INCOME) (EXPENSES) DECISION
1 Son’s Academy 18,000 21,000
2 Sea-Bricks Co. 24,500 19,000
3 Jay’s Fashion Shop 15,880 15,880
4 Jr/Sr Internet Café 6,800 8,300
5 Celjun’s Transpo 22,100 15,500

B. Compute for the cost and analyze the following problems. Write your answers inside the box. Show the
solution in a separate sheet to arrive at the correct answers.
1. If you have two (2) workers receiving each a daily wage of P250.00 a day, with 5 working days a
week, how much is your total wage bill for a month? ANSWER/SOLUTION:
______________________________
2. Based on your answer in number 1, how much is your annual wage cost of production?
ANSWER/SOLUTION: _________________________
3. How much will be your total direct costs per bench if the total direct labor is P200.00 and the total
direct material is 450?
ANSWER/SOLUTION: ____________________________________________
4. What is 25% of the assumed P150, 000.00 indirect costs?
ANSWER/SOLUTION: ____________________________________________
5. As an entrepreneur, what will you expect for a cost of a unit of wood bench when you target for 2,000
unit yearly sales with P225, 000.00 total indirect costs for the year? ANSWER/SOLUTION:
___________________________________________________________________

IV. EVALUATION
Directions: Let us find out how much you already know about production cost and pricing of products or
services. Answer the questions below honestly and write the letter of the corresponding answer in your
activity notebook.

1. What is the business condition when the Total Revenue (TR) is greater than Total Cost (TC)?
a. There is a business loss b. There is a profit c. There is no gain and no loss

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

a. 5 to 12 kilos of laundry b. 10 to 13 kilos of laundry c. 13 kilos of laundry and above

3. It refers to the value set for rendering a service or product for sale or the amount paid for commodities.
a. cost b. price c. profit

4. How much is the price of a bottle of perfume when the cost is P250.00 with 38% Target Profit in Percent
(TPP).
a. P299.00 b. P345.00 c. P380.00

5. A method of setting a price according to the values of the products or services offered to the clients that
usually increases when there are evident results.
a. cost-plus-pricing method b. return on investment pricing c. value-based pricing

6. This describes a method of setting up price to target profit from specific product or service.
a. cost-plus-pricing method b. return on investment pricing c. value-based pricing

7. Price is only one factor in purchasing which may lead to the most risky activity in pricing. This is called
_________________________.
a. highest price strategy b. lowest price strategy c. moderate price strategy

8. What type of costing is direct labor and raw material in production?

a. direct cost b. indirect cost
c. purchasing cost

9. Expenses on building, machines, maintenance, salaries, office costs, selling and financial costs are
better known as overhead expenses. Which of the following costing does it fall?
a. direct cost
b. indirect cost
c. purchasing cost

10. It refers to the margin or difference between the cost price and the selling price of an item.
a. mark-up
b. revenues
c. sales profit

V. ASSIGNMENT

Direction: Write on the worksheet below at least 5 particulars of the direct and indirect costs of any service
type or production business.
DIRECT COST INDIRECT COST
1. 1.
2. 2.
3. 3.
4. 4.
5. 5.
Prepared by:
Vivram M. Zamoras
LSB Teacher

Approved by:

NOEL G. SOLIS, RN
SSP II