Final Exam Preparation

Question 1

What are grey area, value and non-value added costs?

Answer 1

Grey area - Costs that don’t fall into either category
Value added - Costs that directly contribute to the product or service
Non-value added - Costs that do not enhance the product or service for the customer and considered a waste

Question 2

What is life cycle budgeting?

Answer 2

An estimate of the revenues and costs attributable to each product

Question 3

What are the benefits of using life-cycle reporting?

Answer 3

Revenues and costs become more visible, differences amongst products committed at early stage in the life cycle are highlighted