Absolute assurance in auditing - meaning

5 advantages of product life cycle costing

Life cycle costing is a system that tracks and accumulates the actual costs and revenues attributable to cost object from its invention to its abandonment. Life cycle costing involves tracing cost and revenues on a product by product base over several calendar periods.

The following are benefits of product life cycle costing:

  • help to assess the profitability over the entire product life cycle.
  • ¬†Useful for organization producing products with a shorter life cycle.
  • helps i n earlier actions to generate more revenue and reduce costs.
  • Encourage longer-term thinking and forward planning
  • Better decisions will follow from an accurate assessment of total costs and revenues.

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