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“A new product is in development, which will take one year. It’s expected to have a two-year life cycle before being replaced. Which of the following statements about life cycle costing are true? Statement 1: It’s helpful to assess if new products have been successful. Statement 2: The individual profitability for products is less accurate.
A Both statements are true
B Both statements are false
C Statement 1 is true and statement 2 is false
D Statement 2 is true and statement 1 is false”
Hello tutor, for this question, the answer is C, but I do not really understand the reason. Can you please explain it?
Thank you so much!
I don’t know where you found this question, but I don’t really agree with either of the two statements as they have been worded here.
As explained in my free lecture notes, he purpose of life-cycle costing is to assess whether or not a new product is likely to be profitable over it’s entire life as opposed to looking at the profitability in each individual year of it’s life.
Thank you tutor for your reply. This question is from BPP KIT book.
Because of the copy right issue, I just paraphrased the question. But you can have a look at this website, I checked and the content is the same as the one in BPP KIT:
Thank you tutor.
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