F5 - Buổi 3: Environment costing + Life cycle costing

During which stage of its life cycle is a product’s return on capital not important, it is expected to be a net user of cash and show growth but not profit?

• Maturity.

• Decline.

• Growth.

• Introduction.

In which stage of the product life cycle are initial costs of the investment in the product typically recovered?

• lntroduction

• Growth

• Decline.

• Maturity

A product is in the stage of its life cycle which is typified by falling prices but good profit margins due to high sales volume. What stage is it in?

• lntroduction

• Decline.

• Growth

• Maturity

Which of the following statements concerning Life Cycle costing are correct?

• Life cycle costing enables total profitability of any given product to be determined.

• 1. Life Cycle costing is a traditional costing principle.

• Whilst Life cycle costing considers costs associated with the launch of products in the market place, Research and Development Costs are still treated as period costs and not traced to products.

• Life cycle costs are the costs incurred on products from their design stage, through development to market launch, production and sales, and their eventual withdrawal from the market.

Quell Co is a hi-tech manufacturing company with a state-of-the-art information system in place. The management has decided to apply life cycle costing for costing and pricing purposes, on its new range of products that will be launched in a few years time.

Which of the following statements about the application of life cycle costing for costing and pricing purposes is INCORRECT?

• Life cycle costing is more suitable for businesses like Quell Co that use advanced information and production technology

• Life cycle costing is suitable for manufacturing businesses with high pre and post manufacturing costs

• Life cycle costing can only be applied to manufacturing companies like Quell Co but not to other service businesses

• Life cycle costing should be applied starting from the design stage of a new product

Select appropriate types of environmental costs for the following activities:

Quality control inspections to monitor pollution levels in water leaving a production process

• detection costs

• internaal failure costs

• prevention costs

• failure costs

Select appropriate types of environmental costs for the following activities:

Water purification treatment to clean waste water before it leaves the factory

• detection cost

• internal failure costs

• prevention costs

• failure costs

Select appropriate types of environmental costs for the following activities:

Power usage measuring system to monitor energy consumption within the factory

• detection cost

• failure costs

• prevention costs

• internal failure costs

What is the budgeted lifecycle cost per unit for the new product? (to 2 decimal places)

What are the estimated contingent costs to be incurred for the operation of the new plant?