Life Cycle Costing (3) Flashcards
Advantages of life cycle costing (profitability)
Helps management to assess profitability over the full life of a product
Advantages of life cycle costing (develop products)
Can be very useful for organisations to develop products with a relatively short life, where it may be possible to estimate sales volumes and prices with reasonable accuracy
Advantages of life cycle costing (earlier)
The life cycle concept results in earlier actions to generate more revenue or to lower costs than otherwise might be considered
Advantages of life cycle costing (better decisions)
Better decisions should follow from a more accurate and realistic assessment of revenues and costs
Advantages of life cycle costing (longer-term thinking)
It encourages longer-term thinking and forward-planning and may provide more useful information that traditional reports of historical costs and profits for each accounting period