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December 19, 2017 at 7:19 am
I am wondering why we should take the design and development cost in consideration to calculate the life cycle cost per unit in this question. Design and development costs should not be exception, because the product is not generating revenue yet as it was told in the question 2?
Thank you very much
John Moffat says
December 19, 2017 at 7:50 am
We are after calculating the total cost and we include all costs involved, regardless of when it starts generating revenue. (This is nothing to do with how costs would be reported in financial accounts – this is in order to help determine the selling price needed to make the product worthwhile.)
November 20, 2017 at 3:27 pm
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November 20, 2017 at 6:38 pm
Thank you very much for your comment 🙂
May 21, 2017 at 9:30 pm
The first question, I don’t quite agree with statement two being incorrect. Lifecycle costing do take all cost over a product lifecycle including of the design and development cost. And more importantly why the costs are taken for a product over its entire lifecycle is because most of a product cost are incurred in the design and development stage where the product have not reach the market as yet but have started to incur cost. At least that’s what the Text book says. Please let me know if there’s a reasonable explanation for the exception of design and development cost on a product life cycle
May 21, 2017 at 9:50 pm
Hello please disregard my comment above. I realize my error. Sorry about that 🙂
May 22, 2017 at 5:32 am
No problem 🙂
March 6, 2017 at 2:10 am
Why did we use the manaufacturing cost to calculate the cost per unit in Example 1 in the lecture but used the total cost to calculate life cycle costing for practice question #3?
Kindly clarify, please
March 6, 2017 at 6:14 am
But in the lecture we also use total costs – that is the whole point of lifecycle costing!
(The manufacturing cost in the lecture is $6 per unit, but the lifecycle cost is $7.80 per unit).
March 6, 2017 at 3:44 pm
Thanks for your response. I agree we used total costs for both questions however I was wondering whether there was a particular reason why the calculation of the cost per unit used use manufacturing costs ($240,000 lecture) as opposed to total costs (160000 practice quest
March 6, 2017 at 3:52 pm
But there is no 240,000 in the lecture! The manufacturing costs are 50,000 units at $6 per unit, and to this is added the design and development and the end of life costs.
Ganesh Krupa says
February 2, 2017 at 3:01 pm
Good practice question. Thank you.
February 2, 2017 at 3:28 pm
You are welcome 🙂
November 21, 2016 at 10:28 pm
good questions, hope all will be this nice in exams
November 22, 2016 at 5:11 am
Do make sure that you also have a Revision Kit from one of the ACCA approved publishers – it is vital to practice lots and lots of questions.
Samuel Koroma says
May 5, 2016 at 1:25 pm
Thanks for the practice questions. Students should note that life-cycle costing tracks and accumulates costs and revenues associated with a product over its entire life-cycle.
May 5, 2016 at 1:47 pm
Which is covered in our free lectures 🙂
March 23, 2016 at 8:16 am
Pls explain the question 1, Why is Statement 1 true? Because I think in development phase it doesn’t make any profit? Am I right?
Thank you very much,
March 23, 2016 at 2:02 pm
Statement 1 is not saying that there will be a profit in each individual year – there quite likely will not be.
It is saying that we ensuring a profit over the entire life. i.e. that over the whole life it does make a total overall profit.
November 26, 2015 at 4:05 pm
Lifecycle costing question regarding if it takes account of all costs over the life of the product, I think the selection is wrong. A site/software issue. Just a heads up.
November 26, 2015 at 6:34 pm
The answer given in the test is correct – it is not a site/software issue.
Statement 2 is not correct – lifecycle costing takes into account all costs and does not exempt certain costs.
December 3, 2015 at 4:49 pm
Apologies John. My mistake.
December 3, 2015 at 4:53 pm
November 15, 2015 at 8:34 pm
i was a bit scared, thought i was mistaken when i didnt see the costs just now till i read the comment.
November 16, 2015 at 7:02 am
November 15, 2015 at 4:23 pm
There are no lifetime costs on the screen. All three: Design and Development, Manufacturing and End of life costs are shown without $ amounts???
November 15, 2015 at 6:11 pm
Thank you for letting me know. I will have it corrected 🙂
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