What does life-cycle costing include when measuring the total cost of a product?
Correct answer: B. Costs from development through disposal
- A. Only factory costs during production
- B. Costs from development through disposal
- C. Only selling costs after production
- D. Only direct materials used in production
Explanation
Life-cycle costing considers costs over the entire life of a product, including research, design, production, marketing, servicing and disposal. Restricting the calculation to factory or material costs omits important costs incurred before or after production.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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