ACCA PM · Chapter 3 · Question 8 of 9
Which of the following is a benefit of life-cycle costing compared with traditional period-based cost reporting?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Pre-production and post-production costs are attributed to the product so its total profitability over its life is visible
Explanation
Traditional reporting writes off research, development and decommissioning costs as period expenses, so they are not linked to the product that caused them. Life-cycle costing accumulates all costs over the product's life, helping managers judge whole-life profitability and set prices that recover all costs.
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