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I am confused by this question. I would be thankful if you will help me with this!
According to the life-cycle costing method, which TWO of the following statements regarding the stages of the life-cycle are true?
A) At the introduction stage, further capital expenditure will be needed as production capacity will need to increase to meet demand
B) The maturity stage occurs when the market has reached ‘saturation point’ and bought enough of the product
C) The majority of a product’s life-cycle costs are determined by decisions which are made at the design and development stage
D) The growth stage, when sales will have reached their peak and become stable, will be the most profitable stage
Why are you attempting a question for which you do not have an answer – you should be using a Revision Kit from one of the ACCA Approved Publishers, they have answers 🙂
Have you watched my free lectures on lifecycle costing?
(and I do not think that you can have copied the question properly, because B is not proper English.)
It was asked in Sept / Dec 2020 and mentioned in the examiner report. I could not understand this either.
I don’t really understand that is why I asked you earlier. Please help me here.
A is correct because it is when a new product is first started to be produced that capital expenditure will be needed.
B is not correct because once everyone has bought the product sales will start to fall – it will be past the maturity stage.
C is correct because it is when they decide what to produce and how they intend to produce it (which is done at the start of the new product) that most of the future costs will be determined.
D is not correct because it is the maturity stage when sales are at a maximum and are giving to the most profit.
Again, have you watched my free lectures on lifecycle costing?