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Hi John!
Could you explain why the following is not true!
1. Life cycle costs takes into account all the cost incurred in a product life cycle with the exception of sunk costs incurred on research and development.
2.Life cycle costs is most useful for product with an even weighting of costs over their life.
3. By the way, in your lectures when you say “include all the costs”, should committed costs or sunk cost also be included?
Thanks.
We include all costs including sunk costs, which is why the first statement is not true.
Whether or not the costs are spread evenly over the life is not relevant, which is why the second statement is not true.
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