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Hi,
I have noticed in some past questions depreciation is sometimes added in the lifecycle as a cost and sometimes depreciation is not added. Why is this??
Lifecycle costing typically includes depreciation as part of the costs considered over the entire life cycle of a product. Depreciation is an important cost element that reflects the allocation of the initial cost of an asset over its useful life.
By including depreciation in lifecycle costing, organisations can accurately assess the total cost of owning and operating a product from acquisition to disposal, providing a comprehensive view of the financial implications throughout the product’s life cycle.
Depreciation is not always included in some questions on lifecycle costing when the initial cost of the asset has already been considered. Including both the initial cost and depreciation would mean accounting for the same amount twice, which goes against the principles of relevant costing.
If you’re unsure write a statement saying that you are including depreciation because you feel it’s relevant or excluding it has been accounted for.
Thanks for the response. Its just their was two questions and one question you had to add in depreciation but another you didnt so it was pretty confusing to see why it was happening. As I thought you never include depreciation?? So they have to tell you if it is included or not??
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