Which of the Following Is a Benefit of Life Cycle

question 2

Multiple Choice

Which of the following is a benefit of life cycle costing over target costing?

• A) Life cycle costing is less likely to reject a product due to high up-front costs because it considers changes in price and costs over its entire life cycle
• B) Life cycle costing is less expensive to administer than target costing
• C) Products appear cheaper under life cycle costing because it does not consider research and development since this cost occurs prior to production
• D) Life cycle costing focuses only on costs in the product's life cycle; thus eliminating defect and warranty costs often associated with products

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Definitions:

Term of Loan

The length of time over which the loan is scheduled to be repaid.

Compounded Annually

The process of earning interest on both the initial principal and the accumulated interest from previous periods, calculated once a year.

Rate of Return

Rate of return is a measure of the profitability of an investment over a certain period, expressed as a percentage of the original investment.

Term of Loan

The duration of time over which the borrower is obligated to repay the loan, typically expressed in months or years.