Which TWO of the following statements about life-cycle costing are true? Specific product models usually have shorter life cycles than generic products O Life-cycle costing identifies restrictions in resources in order to optimise profitability Life-cycle costs may be overstated if the time value of money is not accounted for Staggering the launch of a product into different markets will shorten its life cycle
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Life cycle costing is a technique of cost accumulation of a product over its life cycle. Now these costs are categorized into three groups, namely upstream, downstream and midstream or manufacturing costs.
As the name suggests, this system tracks the costs of a product which usually has a longer tenure than the other products spanning within a year. The costs incurred may take different forms like research, development, manufacturing, servicing, selling and distribution etc.
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