Life Cycle Costing Essay Example for Free

Life Cycle Costing EssayIt expects the new point of intersections to have a emotional state cycle of 3 years and the following appeals have been estimated. Particulars Year 0 Year 1 Year 2 Year 3 Units make and sold 25,000 100,000 75,000 Price per unit ? 90 ? 80 ? 70 Research and Development Costs ? 850,000 ? 90,000 - Production Costs Variable cost per unit ? 30 ? 25 ? 25 Fixed costs ? 500,000 ? 500,000 ? 500,000 Marketing Costs Variable cost per unit ? 5 ? 4 ? 3 Fixed Cost ? 300,000 ? 200,000 ? 200,000 statistical distribution Cost Variable cost per unit ? 1 ? 1 ? 1 Fixed Cost ? 90,000 ? 190,000 ? 190,000 Customer service cost per unit ? 3 ? 2 ? 2 Required to calculate the cost per unit looking at the whole lifecycle and comment on the price to be charged. Question 3 Fjalar AS, a software company developing a new accounting package, General Ledger. The following are the budgeted amounts for General Ledger over a five-year product life cycle Particulars Year 1 2 Year 3 to 5 One-time set-up Cost Cost per package Research Development Cost ? 240,000 pattern Cost of process ? 160,000 Production Cost ? 100,000 ? 25 Marketing Cost ? 0,000 ? 24 Distribution Cost ? 50,000 ? 16 Customer service Cost ? 80,000 ? 30 For strategic reasons, Fjalar AS have chosen to skim the market by charging higher price to customers eager to try General Ledger when it first comes out, and discredit prices to customers who are willing to wait. The projected selling price per package and sales quantity in units is given below Particulars Year 3 Year 4 Year 5 Selling price per package ? 600 ? 480 ? 400 Sales quantity in units 5,000 4,000 2,500 You are required to calculate the life cycle cost per unit and its operating profit.