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Lifecycle costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Lifecycle costing

  • This topic has 1 reply, 2 voices, and was last updated 2 years ago by John Moffat.
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  • October 20, 2022 at 9:57 am #669418
    aakarsh715
    Participant
    • Topics: 27
    • Replies: 7
    • ☆

    Will interest payments be included in the lifecycle cost assuming it is product related? Also only cashflow expenses are considered in lifecycle costing right? And what about revenue government grants received for production of the product? Will it reduce the lifecycle cost? Also if it’s capital grant that is received only after reducing it from total cost of machinery it Will be included right? Moreover If lifecycle costing is asked in conjunction with the cvp analysis to find out the appropriate units to earn profit. We will neglect all manufacturing or variable cost as it will vary according to volume and calculate contribution per unit (sales_ vc) . What about fixed costs will it include the preliminary costs and RD cost to find out the units for production?

    PS i know these are dumb questions but I don’t wanna fail my examination at any cost so I am questioning everything in detail one by one. Interrelating concepts haha because ACCA loves to test by merging two or three concepts in one question.

    October 20, 2022 at 4:18 pm #669450
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54759
    • ☆☆☆☆☆

    All costs over the lifecycle are relevant (assuming that they are additional costs).

    Also, given that costing questions are only asked in Sections A and B there is no way that there can be questions that combine it with CVP analysis.

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