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This chapter shows the calculation of the total cost incurred in the existing
system, proposed system and the development cost. The chapter also includes the
Computation of Return on Investment which helps to know how will benefit the proposed
system. The Cost-Benefit Analysis is a process by which business decisions are analyzed.
The benefits of a given situation or business-related action are summed.
ANNUAL OPERATING COST OF EXISTING
Schedule 1-SALARIES AND WAGES
Position
6 Staffs (7,000@)
TOTAL ANNUAL SALARY
Monthly Salary
P42,000
Annual Salary
P504,000
P504,000
Computation
Annual
(P9,500*2)-20%
Depreciation
P2,171.43
7
(640*7)-20%
P739.20
5
TOTAL ANNUAL DEPRECIATION
P2,910.63
Total Cost
P100
6 Record Books
6 ream Long Bond paper
7 Long Folders
3 Stapler s
3 Box of staple wire
TOTAL EXPENSES
P60
P190
P12
P65
P45
P360
P1,140
P84
P390
P270
P2,344.00
SUMMARY:
SALARIES AND WAGES
P504,000
DEPRECIATION
P2,910.63
OFFICE SUPPLIES
P2,344.00
*MISCELLANEOUS COST
P5,000.00
Monthly Salary
P25,5000
Annual Salary
P306,000
P306,000
Computation
(P22,900*3)-20%
Annual Depreciation
P11,035.20
5
(6,990*2)-15%
P3,355.20
5
TOTAL HARDWARE COST
Software
Microsoft Windows 8 Pro
Microsoft Office 2013
TOTAL SOFTWARE COST
SW Depreciation Cost
P14,390
Cost
P8,280
P4,495
P12,775
(P12,775-20%)
P5,110
5
HW & SW DEPRECIATION
COST
P19,500.40
Total Cost
P1,800
2,280
P4,080
SUMMARY:
SALARIES AND WAGES
P306,000
P19,540.40
OFFICE SUPPLIES
P1,200
*MISCELLANEOUS COST
P5,000
P334,580.40
* Assumed only
DEVELOPMENT OF COST
Personnel
2 System Developer @P10,000
TOTAL LABOR COST
Hardware
Monthly
P20,000
1 Month
P40,000
P40,000
Monthly
1 Month
3 Laptop
1 Sony Printer
Monthly Depn (67,480-20%)/5=10,797
TOTAL (1) MONTHLY HW
P16,488
P21,995
P23,999
P5,000
P899.75
DEPRECIATION COST
Software
Windows 8
Microsoft Office 2013
TOTAL SOFTWARE COST
(12,775-20%)/2=3,406.66
TOTAL (1) MONTHLY SW
Cost
P8,280
P4,495
P12,775
1 Month
P283.04
DEPRECIATION COST
Items
1 Month Expense
Ballpen
1 G-tech pen
5 Titus (7.50@)
P72
P38
P190
P600
P900
Miscellaneous
Globe and Smart
Transportation
Food
TOTAL MISCELLANEOUS
Cost
P999
P800
P2,000
P3,799
P16,488
P21,995
P23,999
P5,000
P67,482
1 Sony Printer
TOTAL ACQUISITION COST
SUMMARY:
Personnel
P40,000
P899.75
P283.89
P900
Miscellaneous
P3,799
Acquisition Cost
P67,482
P113,364.64
Year 1
P504,000
2,910.63
2,344
5,000
Year 2
P554,400
2,910.63
2,578.40
5,500
Year 3
P609,840
2,910.63
2,836.24
6,050
Year 4
P670,824
2,910.63
3,119.86
6,655
Year 5
P737,906.4
2,910.63
3,431.85
7,320
P514,254.63
P565,389.03
P621,636.87
P683,509.49
P751,569.38
existing system
Year 1
P306,000
P19,500.40
P4,080
5,000
Year 2
P336,600
P19,500.40
4,488
5,500
Year 3
P370,260
P19,500.40
4,936.80
6,050
Year 4
P407,286
P19,500.40
5,430.48
6,655
Year 5
P448,014.6
P19,500.40
5.973.53
7,320.50
P334,580.40
P366,088.40
P400,747.20
P438,871.88
P480,809.02
Total operating
expenses of
proposed system
* Total Annual Operating Cost is assumed to increased by 10 % yearly
Annual Benefit
P179,674.23
P199,300.63
P220,889.67
P244,637.61
P270,760.35
INVESTMENT COST
Development Cost
Maintenace Cost
Total Investment
Year 1
P113,364.64
P113,364.64
Year 2
P3,000
P3,000
Year 3
P6,000
P6,000
Year 4
P9,000
P9,000
Year 5
P12,000
P12,000
Cost
P66,309.59
P196,300.6
P214,889.6
P235,637.6
P258,760.3
3
7
1
5
NET BENEFIT = Annual Operating Cost of Existing -( Annual Operating Cost of
the Proposed + Total Investment Cost)
RETURN ON INVESTMENT
PRESENT VALUE ANALYSIS
Year
Investment
Annual
Factor
Benefit
1
2
3
4
5
TOTAL
Cost
P103,200.66
P3,000
P6,000
P9,000
P12,000
P143,364.64
*(10%)
0.91
0.83
0.75
0.68
0.62
P179,672.23
P199,300.63
P220,889.67
P244,637.61
P270,760.35
P1,115,262.49
PV (C)
PV (B)
P103,058.76
P2,479.34
P4,507.89
P6,147.12
P7,451.06
P123,644.17
P163,340.21
P164,711.26
P165,957.68
P167,090.78
P168,120.87
P829,220.81
Note:
*inflation rate can be change
Factor= 1/(1+i)
Payback Period
Year
1
2
Cost of
Additional
Total
Annual
Investment to be
Investment
Investment
Benefit
receive
113,364.64
47,055.05
0
3,000
109,565.64
50,055.05
176,674.23
199,300.63
Balance
Payback
Period
47,055.05
(153,245.58)
1.0
0.25
1.25
0.25*12 MONTHS = 3 MONTHS
RETURN ON INVESTMENT
ROI Year n = (Annual Benefit (year n) / Investment cost (year n) *100
ROI Year 1
ROI Year 2
ROI Year 3
ROI Year 4
ROI Year 5
158.49%
6643.35%
3681.49%
2,718.20%
2,256.34%