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If a Machine is specifically Acquired at a cost of $5000, to produce products and at the end it has disposal cost of $1000, do we consider both ($5000 and $1000) in the cost of the product while doing life cycle costing or we have to take disposal cost only of $1000.
Answer with reason please.
In life cycle costing, both the acquisition cost and the disposal cost of a machine are considered when calculating the cost of the product.
The acquisition cost represents the initial investment in the machine, while the disposal cost represents the cost of disposing of the machine at the end of its useful life. These costs are included in the overall life cycle cost calculation to determine the total cost of the product over its entire life span.
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