10 - Life Cycle Costing

Question 1

Define the component costs of the Research and Development stage of the product life cycle

Answer 1

Market research, product design, testing, plant and machinery and staff training

Question 2

Define the component costs of the Introduction stage of the product life cycle

Answer 2

Marketing/advertising, productions and distribution

Question 3

Define the component costs of the Growth stage of the product life cycle

Answer 3

Heavy advertising to drive market share, inventory costs, unit costs should start to fall due to economies of scale and customer support costs will increase

Question 4

Define the component costs of the Maturity stage of the product life cycle

Answer 4

Advertising and marketing to maintain brand awareness, some discounts/promotions, units costs should now be low and good profits generated but will still have high customers service costs to stay competitive

Question 5

Define the component costs of the Decline stage of the product life cycle

Answer 5

Decommissioning costs and product retirement costs (equipment scrapping) and possibility of final sales promotion costs