Product Life Cycle Cost Management
July 26, 2010
What is PLC Cost Management?
Product life cycle management is looking at the cost of a product from the beginning to the end of the product. It looks at all the elements of the cost and where spending is taking place at which part of the product (Roubal 2010). According to Roubal( 2010),“Life Cycle Costing (LCC) Methodology estimates costs of products incurred during his whole life cycle” (p.0509). How can management use this style of cost management?
Management can us this style to reduce the costs and earn more money on products earlier in the process. It also gives management a detailed assessment of costs at a certain stage in the life cycle process. According to Roubal (2009), “Life cycle cost calculations we can exploit to evaluation of cost effectiveness spend in pre-production stage too” (p/0509). Why are customers considered sophisticated?
Consumers want products as soon as possible and are willing to pay the price, which is where a lot of profit can be gained. It also puts a lot of pressure on the research and development of the next product. (Roubal 2010). What makes up the sum of the life cycle costing?’
With this method life cycle cost calculation is done before the production of the product to gain detailed cost descriptions and finding out where costs can be cut out and where money can be made. (Roubal 2010).
What are the benefits of this concept?
This concept can help management make better decisions when looking at a products life cycle and determining the cost of the product. (Roubal 2010). According to Roubal, to evaluation of products profitability, it is necessary to into account every cost related with product such as new product development cost, product sustenance cost and product phase-out cost (p/0509). What is the target costing process?
Target costing process is looking at the customer and seeing if it will...
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