Answer (A) is correct . Life-cycle costing estimates a product’s revenues and expenses over its expected life cycle. This approach is especially useful when revenues and related costs do not occur in the same periods. It emphasizes the need to price products to cover all costs, not just those for production. Hence, costs are determined for all value-chain categories: upstream (R&D, design), manufacturing, and downstream (marketing, distribution, and customer service). The result is to highlight upstream and downstream costs in the cost planning process that often receive insufficient attention.
Answer (B) is incorrect because The life-cycle model includes the upstream (R&D and design) and downstream (marketing, distribution, and customer service) elements of the value chain as well as manufacturing costs.
Answer (C) is incorrect because The life-cycle model includes the upstream (R&D and design) and downstream (marketing, distribution, and customer service) elements of the value chain as well as manufacturing costs.
Answer (D) is incorrect because Life-cycle costing emphasizes the significance of locked-in costs, target costing, and value engineering for pricing and cost control. Thus, cost savings at all stages of the life cycle are important.
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