ExpertEasy2 marksMultiple Choice
ACCA · Question 18 · C. Cost accounting techniques
A 3D printing manufacturer is adopting life cycle costing for a new industrial printer. Management wants to ensure all costs from inception to abandonment are captured.
Which TWO of the following costs would be heavily incurred during the pre-production (design and development) phase of the product life cycle?
A 3D printing manufacturer is adopting life cycle costing for a new industrial printer. Management wants to ensure all costs from inception to abandonment are captured.
Which TWO of the following costs would be heavily incurred during the pre-production (design and development) phase of the product life cycle?
Answer options:
A.
Research and development costs
B.
Routine maintenance of manufacturing equipment
C.
Market research costs
D.
Decommissioning and disposal costs
How to approach this question
Identify costs that happen *before* the product is actually manufactured and sold to customers.
Full Answer
Life cycle costing tracks costs over the entire life of a product. The pre-production phase includes costs incurred before manufacturing begins, such as Research & Development (R&D) and initial market research. Maintenance happens during production, and decommissioning happens at the end of the product's life.
Common mistakes
Selecting decommissioning costs, forgetting that the question specifically asks for the 'pre-production' phase.
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