Question

Briefly explain Life-Cycle Cost, clearly explain the time periods and phases involved?

Answer 1

Life cycle costing means a system which tracks and accumulates the actual cost and revenue attributable to cost object from its invention to its abandonment.this cost involves planning, design, acquisition and support cost directly attributable to owning or using the asset.life cycle costing is different from traditional cost accounting system which reports cost object profitability on a calendar basis.i.e monthly, quarterly and annually.this is long term .

Life cycle has four stages , phases involved

1) Introduction 2) Growth 3) maturity 4) Decline

In introduction phases Product is launched,it has higher fixed cost in starting.variable cost vary with the volume of production.

In growth firm is start to earning .In maturity Products received the maturity level .

In decline,product sales is started to decline.