life cycle costing

Hello,

this is relating to questions on the life cycle costing from the Kaplan practice kit.

in one of the questions, it asks about the benefits of life-cycle costing.

the question is:
Which of the following are said to be benefits of life-cycle costing?
• It provides the true financial cost of a product
• The length of the life-cycle can be shortened
• Expensive errors can be avoided in that potentially failing products can be avoided
• Lower costs can be achieved earlier by designing out costs
• Better selling prices can be set
• Decline stages of the life-cycle can be avoided

and solution to this question given is:

Benefits are:
• It provides a true financial cost of a product
• Expensive errors can be avoided in that potentially failing products can be avoided
• Lower costs can be achieved earlier by designing out costs
• Better selling prices can be set.

Now, “my question” is does life cycle costing really help us in setting better selling prices. If yes, How?

well, the following is the very next question in the practice kit:

Which of the following statements are true regarding the justification of the use of life
cycle costing?
(1) Product life cycles are becoming increasingly short. This means that the initial costs
are an increasingly important component in the product’s overall costs.
(2) Product costs are increasingly weighted to the start of a product’s life cycle, and to
properly understand the profitability of a product these costs must be matched to
the ultimate revenues.
(3) The high costs of (for example) research, design, and marketing in the early stages of a
product’s life cycle necessitate a high initial selling price.
(4) Traditional capital budgeting techniques do not attempt to minimize the costs or
maximize the revenues over the product life cycle.
A (1), (2), and (4) only
B (2) and (3) only
C (1) and (3) only
D (1), (2), (3), and (4)

the solution to this question is:
A
(1) This is true, justifying the time and effort of life cycle costing.
(2) As above.
(3) This is not true: life cycle costing is not about setting selling prices, it is about linking
total revenues to total costs. Even if it were about setting a selling price, the early
sales may well be at a loss since it is TOTAL revenues and costs that are considered.
Furthermore, the pre-launch costs are sunk at launch and are therefore irrelevant
when setting a selling price.
(4) This is true. The deliberate attempt to maximize profitability is the key to the life cycle
costing.

Now, first of all here in this question if we go by the logic in the previous question why the answer is not D?
and second of all, don’t we set High selling prices to recoup high development costs in the early stages of a product’s life cycle?

Thanks in advance.