Financial and Cost Assumptions There are certain core elements for evaluating the financial viability of any new venture. The assumptions that affect the forecast financial results relate to expected income and expenses for the proposed venture. It is important that any proposal for starting a new venture must make reasonable assumptions regarding the likely revenue earning and the associated costs for earning the estimated revenue. The revenue assumptions are based on the potential sales of the new product, which can be estimated based on a market survey. The market survey should provide the approximate total market value for the product and the market share that the new product can capture considering the off take of the target market segment. The expected growth in the market size will enable framing the assumptions for future expected sales. These revenue assumptions would as well apply for the new hair product – DREAM. Most important cost assumptions include the production and distribution cost. These costs are based on the proposed volume of production and sales. Information can be gathered from the market on the likely cost of different raw materials and distribution costs. Determination of the appropriate channels of distribution is a prerequisite for arriving at the costing assumptions, as the marketing and distribution costs will depend on the manner the new product is proposed to be reached to the end-user. The marketing costs are based on the marketing plans and advertising methods of the business. There can be a general estimate of administrative and other period costs depending on the industry figures. Factors affecting the internal and external environment of the proposed venture and industry have large influence on the revenue and costing assumptions (Fahey & Narayanan, 1986). Task 2 Marginal Costing Cost Statement Marginal costing system is different from absorption costing. Under absorption costing system, the product cost is calculated by taking into account, the fixed costs. Marginal costing requires the total cost to be bifurcated into fixed and variable cost and the fixed portion are not included in the product costing (Lucey, 2002). Marginal costing method is used for calculating the cost of one additional unit of product or service. The marginal cost of a product is the variable costs in the relevant range of production or sales. It must be noted that within a given volume of production, the fixed costs remain constant and therefore, the marginal costs can be considered as equivalent to the variable costs (Finkler 2001). The total cost of a product item can be calculated using the quantity of resources consumed and the unit cost of resources used in the production. Therefore costing of a product includes the following steps (Brouwer, 2001; Byford, 2003; Sefton et al., 2002) –  1. establishing the objectives of costing,  2. detailed description of the product or service,  3. classification of the resource items required for production,  4. measuring the consumption of different resources, and  5. placing monetary values on the required resource items. According to Waters (2004), it is difficult to choose a reasonably accurate methodology without having a