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1) Sir if an organization ceases production of a particular product then, decommissioning cost associated with that product would be classified as a penalty resulting from closure na? (i.e relevant cost of closure)
2) In chapter 3 , definition of life cycle costing is ” life cycle costing identifies the phases in the life cycle and attempts to accumulate cost over the entire life of the product.”
Sir here , after accumulate cost won’t revenues should also be mentioned? i.e life cycle costing identifies the phases in the life cycle and attempts to accumulate cost and Revenues over the entire life of the product.” ?
1. Yes – that is true
2. No. Life-cycle costing is calculating a cost per unit over the whole life of the product. The business would then use this cost to decide on what selling price to charge. The revenue is not relevant in deciding what the cost is (and would only be relevant in the exam if you were then asked to calculate what the profit would be).
Ok. But sir both Bpp and Kaplan both have mentioned in definition that Lifecycle costing tracks and accumulates costs and revenues
attributable to each product over its entire product lifecycle
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