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Sir if the target costing is on the basis of full cost….then:
Do we include finance cost in life cycle and estimated total cost for target costing purpose?Also sir when calculating LIFE CYCLE COST
Do we include the ABSORBED/APPORTIONED OVERHEADS?No, when calculating the target cost, finance costs are not typically included, but they may be considered in the life cycle costing and estimated total cost calculations, depending on their relevance and direct association with the product’s life cycle.
In life cycle costing, the focus is on considering all costs associated with the product over its entire life cycle. This includes both direct costs (such as materials, labour, and direct expenses) and indirect costs (such as overheads). Therefore, absorbed or apportioned overheads should be included when calculating life cycle costs.
Also sir when we calculate life cycle cost
We include only the life cycle’s worth of depreciation
Like asset life 40 years while the product life is 15 years….we only include in the product life cycle the 15 years worth depreciation right?
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