Explain life cycle costing.

Explain life cycle costing.

• A. Costing only for manufacturing phase.
• B. Cost analysis after product end of life.
• C. Costing that captures all costs over a product's life cycle from inception to end of life, including development, production, and disposal.
• D. Only development costs.

Answer: (C)

Life cycle costing looks at every cost tied to a product over its full life, from the initial idea and development all the way through design, production, use, maintenance, and end-of-life disposal or recycling. It often includes discounting future costs so you can compare options on a common financial footing. This broad view reveals how a choice with a higher upfront price might save money later through lower operating, maintenance, or disposal costs, leading to a lower total life-cycle cost. Focusing only on manufacturing costs ignores those future expenses, while waiting until after use or disposal misses opportunities to influence cost drivers during design and production. Similarly, counting only development costs leaves out ongoing and end-of-life costs. So, the best approach is to capture all costs from inception to end of life.

Life cycle costing looks at every cost tied to a product over its full life, from the initial idea and development all the way through design, production, use, maintenance, and end-of-life disposal or recycling. It often includes discounting future costs so you can compare options on a common financial footing. This broad view reveals how a choice with a higher upfront price might save money later through lower operating, maintenance, or disposal costs, leading to a lower total life-cycle cost. Focusing only on manufacturing costs ignores those future expenses, while waiting until after use or disposal misses opportunities to influence cost drivers during design and production. Similarly, counting only development costs leaves out ongoing and end-of-life costs. So, the best approach is to capture all costs from inception to end of life.