Cost Of Product Life Cycle

Question 1

Cost of product life cycle

Answer 1

Here are the smart notes:

Implications of the Product Life Cycle

• Life cycle costing is crucial in new product launches to ensure profitability.
• Total costs to be recovered include:
  
  1. Research and development costs
  2. Training costs
  3. Machinery costs
  4. Production costs
  5. Distribution and selling costs
  6. Marketing costs
  7. Working capital costs
  8. Retirement and disposal costs

Product Life Cycle Costs by Stage

1. Product Development:
   
   • R&D costs
   • Capital expenditure decisions
2. Introduction to the Market:
   
   • Manufacturing costs
   • Operating costs (marketing, advertisement)
   • Distribution channel setup and expansion
3. Growth:
   
   • Increasing capacity costs
   • Working capital costs
4. Maturity:
   
   • Maintenance and operating costs
   • Marketing and product enhancement costs
5. Decline:
   
   • Maintenance and operating costs
   • Sales retention costs
6. Withdrawal:
   
   • Asset decommissioning costs
   • Restructuring costs
   • Warranty support costs