Most products go through five stages in their life namely, Development, Introduction, Growth, Maturity and Decline. These stages have helped in the design of marketing strategies and it is now believed that it can be equally useful for accountants in the determination of the cost of products.
Required:
Identify FIVE benefits of product life cycle costing. (5 marks)
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- Helps to assess the profitability over the entire life cycle
- Useful for organisations producing products with shorter life cycles
- Helps in earlier actions to generate more revenue or reduce cost
- Better decision will follow from accurate assessment of total cost and revenue
- Encourages longer term thinking and forward planning.