A 3D printing manufacturer is adopting life cycle costing for a new industrial printer. Management wants to ensure all costs from inception to abandonment are captured.

Which TWO of the following costs would be heavily incurred during the pre-production (design and development) phase of the product life cycle?

Answer options:

Research and development costs

Routine maintenance of manufacturing equipment

Market research costs

Decommissioning and disposal costs

How to approach this question

Identify costs that happen *before* the product is actually manufactured and sold to customers.

Full Answer

Life cycle costing tracks costs over the entire life of a product. The pre-production phase includes costs incurred before manufacturing begins, such as Research & Development (R&D) and initial market research. Maintenance happens during production, and decommissioning happens at the end of the product's life.

Common mistakes

Selecting decommissioning costs, forgetting that the question specifically asks for the 'pre-production' phase.

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Practice the full ACCA MA — Management Accounting Practice Exam 5

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