ACCA · Question 4 · Specialist cost and management accounting techniques
Section A
BioGen is a pharmaceutical company that spends heavily on research and development (R&D) before a drug is launched. Once launched, production costs are relatively low, but marketing costs are high in the early years.
Why is lifecycle costing particularly relevant for BioGen?
Answer options:
It focuses solely on minimizing production costs during the manufacturing phase.
It captures the significant pre-production R&D costs, ensuring they are recovered over the product's entire life.
It allows the company to ignore end-of-life environmental and disposal costs.
It is a short-term decision-making tool used for annual budgeting.
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