LIFE CYCLE COSTING - ADVANCED MANAGEMENT ACCOUNTING

Life Cycle Costing (LCC) is a method used to assess the total cost of ownership of a product or system over its entire lifespan. This approach takes into account not only the initial acquisition cost but also all costs associated with owning, operating, maintaining, and disposing of the product or system.
The life cycle of a product typically includes several phases:
Acquisition: This involves the initial purchase cost of the product or system.
Installation and Setup: Costs associated with installation, setup, and any necessary modifications to accommodate the product.
Operation: Costs incurred during the normal operation of the product, including energy consumption, labor, and any ongoing maintenance or repair expenses.
Maintenance and Repair: Costs associated with scheduled maintenance activities, as well as unexpected repairs to keep the product functioning properly.
Downtime and Disruption: Costs related to any interruptions in operations, including lost productivity, downtime, and potential penalties or fees for not meeting contractual obligations.
Upgrades and Enhancements: Costs for upgrades or enhancements to improve performance, extend the lifespan, or comply with regulatory requirements.
Disposal and End-of-Life: Costs associated with decommissioning, dismantling, disposing of, or recycling the product at the end of its useful life.