BU247 Chapter Notes -Whole-Life Cost, Target Costing, Coffeemaker
Document Summary
Chapter 8 measuring and managing life-cycle costs. Companies should create new products and services; innovation drives customer acquisitions and growth, margin enhancement, and customer loyalty. Companies must be concerned about environmental impact from their innovations. Ex: initial life-cycle cost of the product are high, but unit manufacturing costs are low. Also consider the opportunity costs of committing scare resources for new product. Costs may be collected and traced to each organizational function, but companies need a total life cycle perspective that integrates the trade-offs and performance over time, across functional units. Tlcc integrates rd&e, manufacturing, and post-sales service and disposal. Breakdown of costs for each of the functional life cycles differ depending on industry & product. 80-85% of a product"s tlcc are committed by decisions made in this stage of the product"s life most product costs are designed during the research & development stage. After products reach the manufacturing stage, opportunity for cost reduction is limited.
