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PM Chapter 3 Questions Life-cycle costing
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Very good 馃檪
But do make sure that you buy a Revision Kit from one of the ACCA approved publishers. Our tests are just meant to be quick checks, but the Revision Kit is full of past exam and other exam-standard questions in the various question formats. Practice at all the questions is essential to passing the exam.
100% …:)
My first 100% 馃檪 馃檪 out of chapters 1-3 *dances*
100% result , thank you john
Great 馃檪
Scored lowest on this quiz,had to go back to the lecture videos.
It makes sense now.Thank you.
You are welcome 馃檪
Hello
I got question 1 wrong, does it mean that profit is generated throughout the product life cycle even though it is negative profit ie loss which is in the stages from development to growth
No – it means that overall there is a profit (there is likely to be a loss in some years, but a profit in other years – the intention is that over the whole life an overall profit will result).
thank you
You are welcome 馃檪
How is statement 1 correct you dont make a profit in the stage of design and and introductory can you explain
But I explain this in the free lecture – did you not watch the lecture before attempting the test?
Initially you have few sales and a lot of expenses – so you are likely to make a loss.
Dear tutor,
Firstly, thank you very much for taking time to create such a great lecture series and share it for free with all of us!
Secondly, I would like to point out something that I don’t quite agree with in regards to the semantics of the first question. Although, I understand that BEFORE any costs are incurred in regards to a product, ALL of the lifecycle costs should be taken into consideration. But the way the second statement is constructed, “costs ALREADY spent on the design and development” implies D&D costs are already IRRELEVANT (i.e. they are sunk costs) for decision making. Hence, one would argue that if a company is to do a Lifecycle Costing analysis AFTER the costs are already incurred (which is the case with the second statement) then the second statement should be considered correct.
Thank you and best regards!
I understand your point, but life-cycle costing is different from relevant costing in that it attempts to find the cost over the entire life of the product and includes all costs (as a basis for a decision on what selling price to charge).
(This was an actual past exam question)
Dear sir,
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
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.)
Great!!!!!
I know my comment is irrelevant here but I don’t know how to express my feelings and where to and how to show you my heartfelt thanks.
I will InshaAllah (by the will of God) donate to your cause.
God be with you!!!
keep up the good work
Thank you very much for your comment 馃檪
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
Hello please disregard my comment above. I realize my error. Sorry about that 馃檪
No problem 馃檪
Sir,
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
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).
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
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.
Good practice question. Thank you.
You are welcome 馃檪
good questions, hope all will be this nice in exams
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.
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.
Which is covered in our free lectures 馃檪
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,
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.
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.
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.
Apologies John. My mistake.
No problem 馃檪
i was a bit scared, thought i was mistaken when i didnt see the costs just now till i read the comment.
Sorry 馃檨
There are no lifetime costs on the screen. All three: Design and Development, Manufacturing and End of life costs are shown without $ amounts???
Oops!
Thank you for letting me know. I will have it corrected 馃檪