Life Cycle Costing - Dani Ki Costing - CA Final Video Lectures
Life Cycle Costing - Dani Ki Costing - CA Final Video Lectures | Life Cycle Costing - Dani Ki Costing - CA Final Video Lectures | Life Cycle Costing - Dani Ki Costing - CA Final Video Lectures
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Dani
Ki Costing
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Final
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Life
Cycle Costing
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Lecture
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Product Life Cycle Costing
Every Product goes through different stages and phases in its life
it is not a one time process. Thus Product Life Cycle has four different phases
which consists of Introduction phase, Growth Phase, Maturity Phase and
Saturation and Decline Phase. It is necessary to calculate the cost of all the
stages and accumulate the same. This accumulated cost is the life cycle cost of
the product. Life Cycle Costing in simple words is the practice of obtaining
over their lifetime, the best use of physical asset at the lowest cost of
entity.
Different costs are incurred at different phases of production such
as R & D and design costs are incurred at Development stage, promotional
costs are incurred at introductory phase and costs like manufacturing,
distribution and product support costs are incurred at the Growth / Maturity
Stage. Product Life Cycle costing is useful as a planning tool, controlling
tool and a forecasting tool for the organization.
The manufactured product passes through different stage in its life
such as Market Research, Specification, Design, Prototype Manufacturing,
Development, Tooling, Manufacturing, Selling and Distribution, Product Support
and decommissioning / replacement. One of the two pricing strategy viz.
Skimming or Penetration is used by ascertaining the life cycle of the product.
Product life cycle costing involves tracing cost and revenues over a
period of time for each product. It helps in achieving long term rewards as
compared to short term profitability. Product Life Cycle costing is a way to
enhance control over the manufacturing cost of the product. A product life
cycle also has different features in Industrial phase as number of firms
increases and grows fast at introduction stage, it is large at growth stage and
shakeout and exists in maturity and decline stages respectively.
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