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turabhamdani: Please do not answer in this forum – it is the Ask the Tutor Forum, and you are not the tutor! (But please do help people in the other Paper PM forum 🙂 )
vavneetb: One of the main purposes of all types of costing is to help decide on a selling price – obviously we would want to sell at a price higher than cost, so we need to know the cost.
A new product is likely to have high costs in the early years, but if we fixed a selling price based on those high costs then we probably would not sell any. Better to find the cost over the entire life of the product and then decide on a selling price. It may result in a loss in the early years, but ensures a profit over the lifetime.I explain all this in my free lectures. The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
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