pm scma life cycle costing

Question 1

what is life cycle costing

Answer 1

Life Cycle Costing (LCC) is a method of accounting that considers all costs associated with the life cycle of a product, project, or asset, from its initial acquisition through its operation, maintenance, and eventual disposal

Question 2

what are the 5 stages of the product life cycle

Answer 2

1. development - the product has been rewear heeds and made but not yet in market
2. introduction- product is introduced into market. may have to spend large amounts on advertising to get demand form consumers

3.growth- the product gains market share and increases demand and begins to Make profit

4. maturity- growth slows down and sales reaches peak sales and this is most profitable phase in products life
5. decline- the market has bought enough of this product and not reaches saturation. demand falls and eventually may become a loss makes in which the business may stop selling the product

Question 3

what factors are accumulated while calculating life cycle cost per unit

Answer 3

1. R n D costs
2. training cost
3. cost of purchasing
4. production cost
5. marketing and advertisement costs
6. inventory cost ( holding and wherehouse)
7. retirement and disposal costs

Question 4

what are the benefits of life cycle costing

Answer 4

1. there visibility of all costs is increased, as have to look at future stages of product as well. this allows long term decision making and better cost efficiency
2. products can be compared using their stage in the life cycle of product to help decision making e.g comparing a product in growth stage sales vs maturity sales shows very little compared to comparing in same life cycle stage
3. more accurate feedback can take place when deciding if product was success or failure cause you can monitor products performance over long term to see how long it is profitable for and whether any adjustments need to be made
4. useful for organizations that continually develop new products as it will inform when this product will reach decline and then to develop and release the next product

Question 5

what factors need to be managed in order to maximize a products return over its life cycle

Answer 5

1. design costs - the design team must work closely with the manufacturers and sales team and market research team as this stage decides how everything will occur in the future and changing at a later date may be very expensive
2. majority of decisions are taken at the inception of the product so a clear plan is made on when it can be released into market earliest. this gives an advantage in market over competitors
3. this technique will allow the company to plan and be able to break even as early as possible which will allow them to start making profit as early as possible cause who knows what may change in the future

4.may allow for business to asses how long the life cycle will last and possibly come up with strategies to increase it. also it may be possible to plan for a staggered entry into different markets at the planning stage

Question 6

how does a services life cycle differ from a product

Answer 6

the r n d stages usually don’t exist in the same way, what is important is the stages that got into providing the service and how should costs be reduced at each stage

Question 7

what is a consumers life cycle

Answer 7

companies can increase the customer life cycle by attempting to increase their brand loyalty. e.g supermarkets give out loyalty cards for future discounts. this brings the customer back