Continuing with the company selected in Unit 2, think about the types of financial data that would be included and excluded in differential analysis. Propose which specific revenues and costs should be considered in an evaluation to drop or keep a:

• Customer
• Product line

In addition, explain sunk and opportunity costs as they relate to your selected company. Should these costs be considered in differential analysis? Why or why not?

1. The Cement Manufacturing Company sells cements to specialist industries. It sold $20,000 worth of cements in its most recent period with variable costs of $8,000. The Cement Manufacturing Company has fixed expenses of $13,000, resulting in a loss of $1000.

Revenue $20,000 Variable expenses $8,000 Contribution margin = Sales Variable Costs = $12000 Fixed expenses $13,000 Net loss $1000

CM ratio/ Percentage = (Sales - Variable expenses)/Sales

= (20000 8000)/ 20000 x 100

= 60%

Cement Manufacturing Company Details (Hypothetical Values as required in the question)
Assumptions
Particular	Amount ($)
Sales	20000
Less variable Costs
Direct Material	5000
Direct Labor	3000
Contribution Margin (CM)	12000