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Normally we accumulate all costs incurred during the products life in life cycle costing, are there any exceptions to it?
what kind of costs should be excluded?
KINDLY EXPLAIN !
Have at look at it plzForecast sales 20000 units
Selling price $ 43/unit
Markup 40%
Design and development $43000
Manufacturing costs$15/unit
Plant decommissioning $30000If company could spend additional $15000 on design stage manufacturing cost could be reduced
calculate life cycle cost?and why we shouldn’t include $15000 in the last, in our calculation?
But spending the 15000 is only of relevant if we know by how much it would reduce the manufacturing cost.
Have you watched my free lectures on this, because I do work through an example which seems very similar to this one (and you cannot expect me to type out all of my lectures here 🙂 )
The lectures are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well.
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