ACCA Performance Management (F5) Certification Practice Exam

What is one of the goals of Life Cycle Costing?

1. To increase the manufacturing workforce

2. To minimize costs and maximize profits

3. To eliminate all costs associated with production

4. To focus on marketing strategies

The correct answer is: To minimize costs and maximize profits

One of the key goals of Life Cycle Costing is to minimize costs and maximize profits. This approach involves assessing all costs associated with a product throughout its entire lifecycle, from initial design and development, through production and usage, to eventual disposal. By understanding and managing these costs, organizations can identify cost-saving opportunities and enhance profitability. Through Life Cycle Costing, businesses can make informed decisions about product design choices, materials, and processes to minimize total costs while ensuring that the product meets quality standards and customer needs. By looking at the bigger picture of costs over the lifespan of the product, companies can prioritize investments that contribute to long-term cost efficiency and profitability, rather than just focusing on short-term gains. In contrast to this goal, increasing the manufacturing workforce, eliminating all costs associated with production, and focusing solely on marketing strategies do not align with the comprehensive and long-term view of cost management that Life Cycle Costing embodies.