1. What is life cycle costing, and why is it used?

 Life Cycle Costing is a management technique used to provide a long-term

picture of the product and service cost and profitability.
 The use of life cycle costing helps the firm to make a purchasing decision and
used in making alternatives that influences future costs.

2. Do cost management practices change over the product’s sales life cycle? Explain how.

 Yes. The sales life cycle is the sequence of various phases in the product or
services life. There are various phases involved in the sale life cycle and every
product has different cycle.
 The cycle of variety of product depends upon the life cycle of the sales.

3. For what types of firms is life-cycle costing most appropriate and why?

 Life cycle costing is more heavily used by businesses that place an emphasis
on long-range planning, so that their multi-year profits are maximized

4. Explain the difference in intended application between sales life-cycle analysis and life-
cycle costing.

 Sales life cycle is intended in determining the costing for the strategy that a firm
needed to apply for the phases of products that are already in the market.
 Life cycle costing is used to analyze where a firm should focus or concentrate in
terms of costs. It is used in developing the product.

5. What are the different methods of product engineering used in product design and life-
cycle costing?

 Basic Engineering
o The design speed depends on the customer or the firm
o The design cost is relatively low because the production has no idea of
how the product should be designed.
o The effect on the downstream costs are very high.
 Prototyping
o The design speed is slow because it is in the process of testing and trial to
customer
 o The design cost focuses on the materials, labor and time
o Reduction in downstream costs because there is already a feedback from
the customers

 Templating
o Designing speed is fast because they are just improving, changing or
modifying the product based on the customers perspective
o Designing cost is modest because the product already exists and is just
improving
o Downstream costs are unknown
 Concurrent Engineering
o Designing speed is continuous
o Design cost is high
o Reducing downstream costs.