1

Chapter 1

THE PROBLEM AND ITS BACKGROUND

Introduction

Inflation rate is the general level wherein the prices for goods and services is

rising and consequently the purchasing power of currency is falling, in short inflation rate

is the continual act of increasing in the price of goods and services of a business, inflation

happens in every business over a period of time it means if the price of the ingredients

rise, there is an act of increasing to their products. Selling means the exchange of

products or services for money while the price means the amount of something, or the

cost of something, the selling price is the market value that purchase a definite quality,

weight or other measure of goods and services.

According to the Economic Times Inflation occurs due to an imbalance between

demand and supply of money, changes in production and distribution cost or increase in

taxes on products. When economy experiences inflation, i.e. when the price level of

goods and services rises, the value of currency reduces. This means now each unit of

currency buys fewer goods and services. It has its worst impact on consumers. High

prices of day-to-day goods make it difficult for consumers to afford even the basic

commodities in life. This leaves them with no choice but to ask for higher incomes.

Hence the government tries to keep inflation under control. Contrary to its negative
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effects, a moderate level of inflation characterizes a good economy. An inflation rate of 2

or 3% is beneficial for an economy as it encourages people to buy more and borrow

more, because during times of lower inflation, the level of interest rate also remains low.

Hence the government as well as the central bank always strive to achieve a limited level

of inflation.

In every bakeries they use different ingredients for their products specially

breads, bread is one of the major segments of foods processing industry , bread is

typically made by flour, butter, salt, water to formed loaf or another shape and it is baked

in oven and this products are available in many forms and type which are very popular

now and then, and this are the monay, ensaymada, mammon, pan de coco and other tasty

bread but the most popular is hot pandesal people use to buy breads all the time but there

are times when the ingredients of a particular bread increase so that means that there is a

sudden effect through the products of a certain bakeries if the amount of sugar increase

definitely there is also a chance to increase the price of their products and that is not

possible to happen to a certain bakeries, so the owners or the employee of that bakeries

will do a way or find a way to maintain the quality or the quantity of their product so that

people will still buy their products. When inflation rate causes cost to rise some

companies choose to raise their prices on lockstep or worst they’ll wait and then raise the

price a lot at once and because of that the consumers will tend to hate the lockstep pricing

and start bashing the company even though it’s just to cover the cost of inflation rate.

Consumers are favoured to the low pricing of a particular product; a company will suffer

from rising costs and fail to attribute them to their regular compounding inflation.
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In general, when inflation increase their saving accounts have been affected

negatively because of lose purchase power on an account and their currently interest rates

are getting low and there is very little incentive for saving money. During the period of

inflation rate if the companies cannot pass their increased costs on to consumers the

business suffer financial losses, and this causes the value of the stocks to go down in

short the profit of the business will go down and it really affects the company and also

the employees.

Statement of the Problem

The study aimed to identify the relationship between costs of ingredients to the

selling price of products in the Bakeries of the City of Tarlac.

Specifically, this study sought to answer the following questions:

1. How may the business profile be described in terms of the following:

1.1 Type of the Business

1.2 Number of years in existence

1.3 Location or Branch

1.4 Average Daily Revenue

2. What are the ingredients that are usually affected by inflation?

3. How may the increase of the ingredients’ price brought by inflation be described?
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4. Is there a significant relationship between the cost of ingredients and the selling price

of the products?

5. In what rate does the cost of ingredients affect the product’s selling price?

Significance of the Study

By conducting this study we aimed to benefit some people by making them aware

of the different strategies of Bakeshops if there is an increase of price of the ingredients

and how it affects the selling price of the products.

The Consumers. This research can benefit the consumers especially the ones

who are often buying in Bakeshops, by reading our research they can get an idea of why

and how the selling price change because of the price hike of baking ingredients making

them aware of the different strategies of bakeshops and the best times to buy the bread

they want.

The Owners or Managers. This research can help the owners or managers of

bakeshops manage the control of their budget and the actions necessary when an inflation

of ingredients happens, by reading our research they would know how other bakeries deal

with the problem and the average rate in which the prices change.

The Future Researchers. This research can help other researchers in conducting

theirs as well. They can make use of this research to gain more information about their

topic and maybe if our topics are related they might find something useful to add in their

own research.
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Scope and Delimitation of the Study

The study aimed to identify the strategies of bakeshops, the effect of cost of

ingredients to the selling price and quantity of the products of Bakeshops in the City of

Tarlac.

The study aimed to identify the effect of the inflation rate of baking ingredients to

the selling price of bakery products. The study considers the bakeshops’ profile such as

the number of years in existence, location and its form of business organization. The

researchers limited the study to 15 bakeshop owners. The respondents of the study are

bakeshop owners from the City of Tarlac. Each of the respondents was given a checklist

to answer. The owners came from different popularities and types of bakeshops to avoid

prejudice of their perceptions.

In order to assure manageability of the collected data, we’ve decided to use

interviews as our main method of collecting the data needed. The interviews will be a

way for us to know their answer on the different questions regarding how the increase in

price of the ingredients affects their business as a whole. The researchers included

additional interview questions that will provide us information on the profile of the
 6

business. Open-ended questions were used to have a better and clearer understanding of

their answer and also encouraged them to answer the questions accurately and sincerely.

Definition of Terms:

Terms here is operationally defined for better understanding of the readers

Cost. The amount or equivalent paid or charged for something. (Merriam Webster

Dictionary)

Ingredients. Something that enters into a compound or is a component part of any

combination or mixture. (Merriam Webster Dictionary)

Product. A product is the item offered for sale. A product can be a service or an item. It

can be physical or in virtual or cyber form. (The Economic Times)

Strategy. An action designed to achieve a long-term or overall aim. (English Oxford

Living Dictionary)

Increase. The act of becoming a large or greater or of making something larger or

greater. (Cambridge Dictionary)

Quality. The standard of something measured against other things of a similar kind.

(English Oxford Living Dictionary)

Quantity. The aspect in which thing is measurable in terms of greater, less or equal or of

increasing or decreasing magnitude. (Merriam Webster Dictionary)

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Profile. The representation of something in outline. (Merriam Webster Dictionary)

Chapter 2

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter shows the studies and literature that are related to this research.

These works will help the Researchers in the development of the study and will be used

as a reference for the different ideas presented.

Related Literature

According to an article titled “How Inflation Affect your Cost of Living”, talks

about how the increase in price of the different products you buy affect your daily life

most importantly your expenses and budget. The author talked about why keeping track

of the changes in price of goods important especially if you want to save money or

control the cost of what you want to buy. (Ullman, 2015)

In bakery industry a number of factors affect the cost of production of bakery

products. These factors may be the quality of raw material, cost of preservation,
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transportation cost, office expenses etc. Based on his study these are the primary factors

that are usually the cause why the production cost of bakeries increases which will lead to

the price hike of bakery products. (Garg, 2015)

According to an article published by Philippine star in 2010 written by Ric M.

Princa, Filipinos are described as a group of a people who can't withstand a day without

eating a piece of bread - pandesal as a stapled food for breakfast and a few slice of bread

for their snacks that may be their all-time favorite ensaymada, pan de coco, monay,

mamon rolls, French bread and the list goes on. That is why the Filipino are greatly

affected when information occur in bakery industry.

Bakery product manufacturers need to calculate all the elements of cost for bakery

product costing and should be updated to the changes especially in the increase in price

every month. This activity is critical exercise for bakers to arrive at correct price attain

profit on sales. (Bakery Bazar)

According to these excerpt, increases in the price of raw materials used to

manufacture our products could materially increase our costs and decrease our

profitability. Any raw material price increase would increase our cost of sales and

decrease our profitability unless we are able to pass higher prices on to our customers. In

addition, if one or more of our competitors is able to reduce its production costs by taking

advantage of any reductions in raw material prices or favourable sourcing agreements, we

may face pricing pressures from those competitors and may be forced to reduce our
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prices or face a decline in net sales, either of which could have a material and adverse

effect on our business, results of operations and financial condition. (MFB 10-K, 2008)

Price increases for energy costs and raw materials could have a significant impact

on the company’s ability to sustain and grow earnings this is the main point of the

excerpt. The company’s manufacturing processes consume significant amounts of energy

and raw materials, the costs of which are subject to worldwide supply and demand as

well as other factors beyond the control of the company. Significant variations in the cost

of energy, which primarily reflect market prices for oil and natural gas and raw materials,

affect the company’s operating results from period to period. When possible, the

company purchases raw materials through negotiated long-term contracts to minimize the

impact of price fluctuations. The company has taken actions to offset the effects of higher

energy and raw material costs through selling price increases, productivity improvements

and cost reduction programs. Success in offsetting higher raw material costs with price

increases is largely influenced by competitive and economic conditions and could vary

significantly depending on the market served. If the company is not able to fully offset

the effects of higher energy and raw material costs, it could have a significant impact on

the company’s financial results. (DD 10-K, 2007)

Related Studies

Foreign

The study conducted by S. Kiumarsi and the others entitled “Marketing strategies

to improve the sales of bakery products if small-medium enterprise (SMEs) in Malaysia”

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talks about the different strategies that bakeries can use to lessen the cost but improve

their sales. Strategies like knowing how to value add on bakery products, its quality, what

type of product is moving fast on the market and which bakery product has a higher profit

margin. The researchers also used made some graphic organizers that would help the

readers understand the different strategies clearly and smoothly.

S. Kiumarsi et al. made a research on 2014 regarding the different strategies that

bakeshops can use in order to increase their sales and lessen their cost at the same time. It

is similar to this study because both researches want to know how bakeshops deal with an

increase of costs especially because of a price hike. But the studies are also different in

terms of the main focus of the study, the sampling method and the respondents.

Annie Doolittle and the others’ study entitled “Industry Analysis: Bakery

Industry” that identified the different barriers that keep companies from gaining or

maintaining success such as lack of capital, brand recognition and high cost of material

and labor. They also mentioned some of the key factors that can help determine whether a

baking company will be successful or not and that is 1) the ability to pass on cost

increases 2) Supply contracts in place for key inputs 3) Proximity to key markets 4) Use

of the most efficient work practices 5) Product differentiation and Lastly 6)

Establishment of brand names.

Doolittle et al.’s study is similar to this research in terms of the aim of the

research, both studies want to benefit the owners of bakeshops by giving them the

information they need in order to operate their business effectively and efficiently. But on
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the other hand, the researches varied when it comes to the respondents of the study,

research design and the main focus.

Local

The study conducted by Esteron, Sampang and Santos ( 2008 ) entitled

"Profitability of bakeshop in the City of Tarlac" was about the different factors that affect

the profitability and the profitability rate of bakeshops especially here in Tarlac City. The

researchers made use of interviews, questionnaires and documentary analysis as a basis

of their study as well as their data gathering instruments. Base on their findings, 50% of

the respondent said that their net income increased as the time goes by but the other half

said that their net income decrease from the time to time, this goes to show that the

profitability of bakeries are in a normal state and can be describes as 50:50 chance of

success. The researchers also gave some recommendation regarding cost reduction,

promotional strategies and the quality of the product.

The study of Esteron, Sampang and Santos is similar to this study because both

study talk about the different factors that affects the operation of bakeshops. This

includes the cost of ingredients and its relationship with the selling price which translate
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to the net income of the business. But it also differed from this study in terms of its main

focus, scope and delimitation as well as the number of the respondents.

This research was conducted by Vergara and others ( 2006) entitled "Financial

performance of selected Bakeries in Tarlac City" was about the effect in their financial

performance especially here in Tarlac City. The researcher made use interview to validate

those data and also they use questionnaire as basis of their study and to support their

conducted study base on their findings that 30% of sole proprietor bakeries said that their

initial capital is below 50,000 and majority of them said that they got their initial capital

by their savings and they just allocate their enough cash of money considering the

expenses venturing in such business. IT shows that these bakeries has different factors

that affect their financial performance and their sales still increase in terms of pricing and

giving a fair amount of price to their products that would give a good effect to their

performance.

The study of De Guzman and Vergara is similar to this study because both studies

focused about the effect of the different factors that affect to the financial performance of

selected bakeries. This includes the giving of reasonable prices and fair amount of the

products that would cause a good affect to the business. But it also different from this

study in terms of its scope and delimitation as well as the number of the respondents.
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Chapter 3

METHODS OF STUDY AND SOURCES OF DATA

This chapter shows the research design that was employed. This also contains

detailed information about how the research was conducted, how the data were collected

and the procedures and instruments used in conducting the study.

Research Design

Because of the nature of this research, it is considered to be a descriptive study. It

will explore the relationship between the inflation rate of baking ingredients and the

selling price of the products in bakeshops.

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Locale of the Study

This study was conducted at the different barangays of Tarlac especially from San

Vicente, Suizo, San Roque and F. Tanedo. Fifteen owners or personnel of bakeshops

were chosen purposively based on their availability, and location.

Statistical Treatment

To interpret the data effectively, the researcher will employ the following

statistical treatment. The Rate of Increase and Price change are the tools used to interpret

the data.

% = F/N x 100

Where: % = Percentage

F = Frequency or number of respondents under each category.

N = Total number of respondents.

The Respondents of the Study

The respondents of this study were the owners/managers of Bakeshops here in the

City of Tarlac who is responsible on operating their business to earn, making plans to

keep the business operated and dealing with the factors that may affect the performance
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of their bakeries financially. The selection of the respondents was through purposive

sampling design.

Sampling Methods

This study made use of purposive sampling design which means that the

respondents were chosen based on the researchers’ judgement with their availability,

activity and location considered.

Research Instruments

The data needed in this study was gathered using a 10 minute interview with the

chosen participants; they were asked many different questions that will answer the SOPs.

We made use of questionnaire to improve the quality of the interview while keeping it on

track and precise, we also made use recording device such as cameras and cell phones to

record the interview so we can make use of it later in the research.

Data Gathering Procedures

In order to collect the necessary data that we need in this research we came up

with the procedures that will guide us on our interview with the respondents and other

data collecting methods. First, we would give them a form asking for their consent so the

interview will be completely voluntary. After they gave us their content, we started the
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interview and asked them specific questions related to our study. Second, we wrote down

their answer in a paper and took a recording of the whole interview which will be used

later in the study. Lastly, we summarized all of the respondent answer and made it ready

to be included as a part of the study.

Figure 2.1 Paradigm of the Study

Input

Identify if there is a relationship between the

ingredients’ inflation rate and the selling price

of the products.

Output Process

Representation of the relationship Analysis and gathering of data related to

between the two. The increase rate of the the relationship of the ingredients

selling price if there is an inflation rate in inflation rate and the products through

the baking ingredients the use of questionnaires and interviews

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Chapter 4

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

This chapter presents the data collected in tabular and textual terms. The data

were organized, classified, and examined using the appropriate statistical tools and

procedures described in Chapter three.

As regards with the problems of the study, the following data were gathered:

1. Profile of the Business

In this problem, the researchers’ aimed to identify the profile of the businesses.

The type of business, number of years in existence, location or branch, and the business’

average monthly revenue are included.

1.1 Type of Business

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The type of the businesses was identified to determine which type (Sole

Proprietorship or Partnership) makes up the majority of the bakeries in Tarlac. Table 1

shows its frequency and percentage.

Table 1

Type of Business

Type of Business Frequency (f) Percentage (%)

Sole Proprietorship 15 100%
Partnership 0 0%
TOTAL 15 100%

Table 1 show that out of all the 15 respondents (15) fifteen or 100% of them built

a sole proprietorship business. It can be concluded from the table that sole proprietorship

is a type more common than partnership.

The researchers want to identify how old bakeries are in the different barangays

of Tarlac.

Table 2 shows the age of the businesses.

1.2 Number of years in existence

The age of the businesses was identified to determine how old bakeries are in the

province of Tarlac. Table 2 shows its frequency and percentage.

Table 2

Years of Existence
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Age Frequency (f) Percentage (%)

Below 5 Years 8 53.33%
5-10 Years 4 26.67%
10-15 Years 3 20%
TOTAL 15 100%

Table 2 shows that out of 15 respondents, there were (8) eight bakeries that are

below 5 years, (4) four bakeries that are between 5 to 10 years and (3) three that are 10 to

15 years old. It can be concluded from the table that majority of the bakeries are below 5

years old.

The researchers want to identify the location or branch of the 15 bakeries that

became the study’s respondents.

Table 3 shows the location or branch of the bakeries.

1.3 Location or Branch

The location or branch of the businesses was identified in order to determine if

there are numerous bakeries in every barangay of Tarlac. Table 3 shows its frequency and

percentage.

Table 3

Location or Branch

Location or Branch Frequency (f) Percentage (%)

San Vicente 6 40%
San Roque 3 20%
Victoria 1 6.67%
Tibagan 1 6.67%
San Sebastian 2 13.33%
Suizo 1 6.67%
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Sto. Cristo 1 6.67%

TOTAL 15 100.01%

Table 3 shows that out of 15 respondents, there were (6) six bakeries from San

Vicente, (3) three from San Roque, (1) one from Victoria, (1) one from Tibagan, (2) two

from San Sebastian, (1) one from Suizo and (1) one from Sto. Cristo. It can be concluded

from the table that most of the respondents are located at San Vicente, Tarlac City.

The researchers want to identify the average monthly revenue of the bakeries

from the different barangays.

Table 4 shows the average monthly revenue of the businesses.

1.4 Average Monthly Revenue

The average monthly revenue of bakeries was identified in order to determine the

average income these businesses are able to generate in a month. Table 4 shows its

frequency and percentage.

Table 4

Average Monthly Revenue

Average Monthly Revenue Frequency (f) Percentage (%)

Below 10,000 1 6.67%
10,000-30,000 5 33.33%
31,000-50,000 5 33.33%
51,000-100,000 2 13.33%
101,000-200,000 2 13.33%
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Above 200,000 0 0%
TOTAL 15 99.99%

Table 4 shows that out of 15 respondents, (1) one of them has an income below

10,000, (5) five with 10,000 to 30,000, (5) five with 31,000 to 50,000, (2) two with

51,000 to 100,000 and another (2) two with 101,000 to 200,000 revenue every month. It

can be concluded from the table that majority of the respondents has a monthly revenue

of either 10,000 to 30,000 or 31,000 to 50, 000 pesos.

2. Ingredients that are usually affected by Inflation

This problem aimed to identify which ingredients are typically affected by

inflation and those that do not.

Table 5 shows which ingredients are subject to change their prices when inflation

occurs.

Table 5

Ingredients affected by Inflation

Ingredient Frequency (f) Percentage (%)

Flour 14 93.33%
Sugar 10 66.67%
Leavening 4 26.67%
Salt 6 40%
Dairy 4 26.67%
Oil and Shortening 1 6.67%
Extracts and Flavorings 1 6.67%
Spices 0 0%
Add-Ins 1 6.67%
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Table 5 shows that (14) fourteen respondents chose flour, (10) ten picked sugar,

(4) four for leavening, (6) six for salt, (4) for dairy, (1) one for shortening, (1) one for

extracts and flavorings, (0) zero for spices and (1) one for add-ins. It can be concluded

from the table that the ingredient that is mostly being affected by inflation is flour.

3. Increase of the ingredients’ price brought by Inflation

This problem aimed to identify how inflation affects the ingredients’ price and the

rate of change that it will provide.

Table 6 shows how much the prices of ingredients increase when inflation takes

place.

Table 6

Increase in the ingredients’ price

Price Range Frequency (f) Percentage (%)

1.00-2.00 11 73.33%
3.00-4.90 2 13.33%
5.00-9.90 2 13.33%
10.00-15.90 0 0%
16.00-19.90 0 0%
20.00 or more 0 0%
TOTAL 15 99.99%
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Table 6 shows that out of 15 respondents, (11) eleven of them said that the usual

change is between 1.00 to 2.00, (2) two said that it is between 3.00 to 4.90 and another

(2) two for 5.00 to 9.90. It can be concluded that majority of them believe that the

ingredients’ price increases by 1.00 to 2.00 pesos when affected by inflation.

4. The relationship between the cost of ingredients and the selling price of the

products

This problem aimed to identify if there is a significant relationship between the

cost of ingredients and the selling price of products.

Table 7 shows how often cost of ingredients affect the selling price of the

products. 1= Always 2= Sometimes 3= Very Often and 4= Never are the following

rankings.

Legend: 1-1.99: Always 2-2.99: Sometimes 3-3.99: Very Often 4-4.99: Never

Table 7

Relationship between the cost of ingredients and the selling price of the products

Situations Frequency Mean Verbal Description

When the cost is
increased, the price 20 3 Very Often
will also increase
When the cost is
increased, the price 20 4.13 Never
will decrease
The price will 20 2 Sometimes
remain the same,
doesn’t matter if
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there is a change in
cost
When the cost is
decreased, the price 20 3.73 Very Often
will increase
When the cost is
decreased, the price 20 3.8 Very Often
will also decrease
GRAND MEAN 20 Respondents 3.332 Very Often

Table 7 displays that the (1st) first situation which states that when the cost is

increased the price will also increase, the (4th) situation which states that when the cost is

decreased the price will increase and the (5th) which states that when the cost is decreased

the price will also decrease happen VERY OFTEN according to the respondents. While

the (2nd) second situation which states that when the cost is increased the price will

decrease NEVER happens and lastly the (3rd) third situations which states that the price

will remain the same regardless of the change in cost happens SOMETIMES. It was also

revealed that out of 15 respondents, the grand mean is 3.332 with a verbal description of

VERY OFTEN.

5. The rate cost of ingredients influence products’ selling price

This problem aimed to identify the rate of change between the products’ selling

price and the cost of the ingredients that they used to make the products.

Table 8 shows how much the selling price spikes if the cost of ingredients also

experienced an increase.

Table 8

Increase in selling price

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Price Range Frequency (f) Percentage (%)

1.00-2.00 7 46.67%
3.00-4.90 1 6.67%
5.00-9.90 0 0%
10.00-15.90 0 0%
16.00-19.00 0 0%
20.00 or more 0 0%
Less than 1.00 0 0%
No change 7 46.67%
TOTAL 15 100.01%

Table 8 shows that out of the 15 respondents, (7) seven of them thinks that the

usual difference between the old and the new price is between 1.00 to 2.00 pesos, (1) one

of them believe that it is between 3.00 to 4.90 pesos but the remaining (7) seven

respondents said that the price do not change. It can be concluded that 50% of them

change increases their price by 1.00 to 2.00 pesos while the other half do not change their

price at all.
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Chapter 5

SUMMARY, CONCLUSION AND RECOMMENDATION

This chapter presents the summary of the findings, conclusion and

recommendations of the study to Ingredients’ inflation rate and selling price of

Bakery products: an analysis.

Summary

The analysis of the data yielded the following sets of findings based from

the gathered data of the researchers from the respondents.

1. Profile of the Business

They own and run their business individually which simply means they

can be considered as sole proprietorship, wherein there is no legal distinction

between the owner and business entity. Majority of the businesses is below (5)

five years old while some of them are below but both continue moving forward

while improving and maintaining the existence of their business. Their businesses

are located at the City of Tarlac, specifically in San Roque, San Vicente, San

Sebastian, Victoria, Suizo, Sto. Cristo and Tibagan. And when it comes to their
 27

daily revenue, they normally earn more than (3) three thousand to (5) five

thousand pesos, and their overall monthly average is between (10) Ten thousand

pesos to (30) thirty thousand pesos.

2. Ingredients that are usually affected by the inflation.

Normally, when there is an inflation bakeshops are one of the business

who are affected by this situation, and when the cost of ingredients that they are

using to produce their products like flour, sugar, dairies, leavening and add- ins

increase they will resort to a price change or sometimes just remain the same.

Majority of the respondents said that flour is the primary ingredient that will most

likely be affected by inflation

3. Increase of the ingredients’ price brought by inflation.

The amount of the ingredients change when there is an inflation rate, and

it brought a big impact to every ingredients up to the products. When inflation

occurs, the price of the ingredients increases especially the flour, sugar and

leavening. The normal amount of price that these ingredients will increase up to is

1 peso to 2 pesos that's why the effect of this inflation brought changes to the

price of the ingredients.

4. Relationship between cost of ingredients and the selling price of the

products.

When the cost of the ingredients increases due to inflation, they usually

raise the selling price of their products to cancel it out making it a cause and effect
 28

relationship. When there is a change in cost of the ingredients there will also be

changes to happen in the price of the products. If there are changes due to

inflation automatically there will be changes in the amount and cost of products.

5. The rate cost of ingredients affect the selling price of products.

For every change that cost of ingredients experience there will also be

changes to its products selling price, these two displays a directly proportional

relationship. And due to the inflation of ingredients, businesses like bakeshops are

affected because of its dependence on its ingredients. They usually increase the

amount of their selling price by (1) one peso to (2) pesos in response but some of

them remain the same.

Conclusion

In the light of the forgoing finding the following conclusions were

derived.

1. Profile of the business

It is found that their business is sole proprietorship which means that they

own the profit alone and they don't need to transact it to others because they are

the only owner of the business. The existence of their business is more than (5)

five years and still going. And when it comes to their income they were satisfied

with their daily earnings, and their over-all monthly income can be considered

profitable.
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2. Ingredients that are usually affected by inflation.

In conclusion, the usual ingredients that were affected by inflation are

flour, sugar, dairies, leavening and add-ins. But the most affected ingredient of

them all is flour, mostly because flour is the primary ingredient to make breads

which means that the volume is larger than the others. It can also be concluded

that when inflation occur the first ingredient that will be affected is flour and the

next one is sugar.

3. Increase of the ingredients price brought by inflation.

The inflation creates a big impact to the price of ingredients; because of

inflation the price of ingredients will be higher than normal which means that the

expense of the business will rise with it. It can be concluded that both of them are

connected and affect each other.

4. Relationship between the cost of the ingredients and the selling price of the

products.

It can be concluded that there is a significant relationship between the cost

of ingredients and the selling price of the products. It can be derived from the

results that half of the time both factors are directly proportional with each other,

there are also rare cases where they are inversely proportional and sometimes

there won’t be any change at all.

5. Rate of the cost of ingredients affect the products selling price.

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Due to the increase rate of the ingredients, bakeshops normally add (1)

pesos to (2) pesos to the original selling price, because they were affected to the

impact of the inflation. Most of the time they don't have a choice but to increase

the price of their products in order to equal it out because if they don't there is a

possibility that their revenue will decrease.

Recommendations

Base from the findings of the study the following recommendations are hereby

presented.

1. Profile of the business

It is good to have a business and is recommended to run a sole

proprietorship because it is a type of business wherein you own it and run it by

yourself. But situations like inflation will test how you manage your business, but

the good thing is that you have a steady source of income can help others get

through the day.

2. Ingredients that are usually affected by the inflation.

When inflation occurs and some of the ingredients were affected

especially the flour and sugar, bakeshops should control the amount that they use

in order to save excess volume. But if they have enough supplies to do it they

must maintain and remain it the same so that they can keep their customers’
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loyalty and can earn enough money to afford even the inflation-affected

ingredients.

3. The increase of the ingredients price brought by inflation.

If there is an inflation and made the price of ingredients increase, it is

normal to put an extra bill or amount to the original price of the product but they

should also think if their customers is willing to pay more or not. It is too risky to

increase the selling price of the product without thinking about it because they

don’t want their customers to stop buying from them which can gradually

decrease their sales and bring the business down. But they don’t have to worry

about it too much because it is only a temporary problem and might revert back in

the next month or so.

4. Relationship between the cost of ingredients and the selling price of the

products.

If there are changes due to inflation the selling price of the products will

also be affected, the best way to deal with the problem is to add an additional

amount to the selling price but should still be affordable for the customers to buy

so that the demand for bread won’t become lower and the monthly revenue will

remain the same or even higher.

5. Rate of the cost of ingredients affects the products selling price.

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It is not that bad if the cost of the products will increase by 1 peso to 2

pesos and the selling price with it because it is not that expensive and heavy for an

individual, and still affordable. The business can use many efficiency strategies to

save materials and if the business is not that affected they must maintain the price

if they could, so that the customers won't hesitate to buy their products every

time.