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John Moffat.
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Syed Ahsan Ali
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Sir, I read the lifecycle technical article which says that:
All costs should be taken into account when working out the cost of a unit and its profitability.
Since all costs are considered in lifecycle costing so that includes sunk cost, opportunity cost and depreciation and other costs that are directly attributable to the new product lifecycle.
I don’t have a past question where all these costs are considered that is why I asked you! 🙂
John Moffat
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As far as depreciation is concerned, we either include the initial cost of any equipment etc., or we include depreciation. We don’t include both because that would be accounting for the same amount twice!
Opportunity costs are only for relevant costing, not for life-cycle costing.
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