Question 1

**Section A**

PharmaLife is developing a new specialized medication. The company has noted that 80% of the product's total life-cycle costs are committed before the product even reaches the manufacturing stage.

During which phase of the product life-cycle are these costs primarily committed?

Accepted Answer

Understand the difference between costs 'incurred' and costs 'committed'. Costs are committed when decisions are made that dictate future spending.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Confusing costs 'committed' with costs 'incurred'. Most costs are incurred during production, but committed during design.

Section A

PharmaLife is developing a new specialized medication. The company has noted that 80% of the product's total life-cycle costs are committed before the product even reaches the manufacturing stage.

During which phase of the product life-cycle are these costs primarily committed?

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA PM — Performance Management Practice Exam 6

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