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Essential features of Life Cycle Costing:

Costs are incurred along the product’s life cycle starting from product’s design, development, manufacture, marketing, servicing and final disposal. The objective is to accumulate all the costs over a product life cycle to determine whether the profits earned during the manufacturing phase will cover the costs incurred during the pre and post manufacturing stages of product life cycle.

Product Life Cycle costing involves:

• Tracing of costs and revenue of product over several calendar period- throughout their entire life cycle.
• Emphasis is on Cost and revenue accumulation over the entire life cycle of the product.
• Life cycle costing traces research and design.
• It focuses on development costs, incurred to individual products over their entire life cycles.
• Total magnitude of research and development costs are reported and compared with product revenues generated in later periods.
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