The objective of life cycle costing is to minimise life cycle cost by optimizing reliability, maintainability and supportability. Figure 4 illustrates the relationship between the system operational effectiveness and other design parameters. Life cycle cost will decrease as the reliability increases.
What is life cycle costing and stages of life cycle costing?
Life cycle costing provides an estimate of the cost that an asset will incur in its lifetime. Life cycle costing calculation generally involves adding six types of costs; purchase costs, maintenance costs, operational costs, financing costs, depreciation costs, and end-of-life costs.23 Sept 2021
What is life cycle costing in accounting?
Lifecycle costing is the maintenance of physical asset cost records over entire asset lives. This means decisions around the acquisition, use or disposal of assets can be made in a way that achieves the optimum asset usage at the lowest possible cost to the entity.
What are the stages of life cycle costing?
The cycle is represented by a line that can be divided into four stages: introduction, growth, maturity and decline. The aim is to increase the product's value at each stage.