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CMA Final · Strategic Cost Management · Asset Life Cycle Costing

Asset life cycle costing differs from product life cycle costing mainly because asset life cycle costing:

Asset life cycle costing follows a physical asset's total cost of ownership from acquisition planning through operation and maintenance to disposal, viewed from the user's perspective, whereas product life cycle costing follows a product's market life from development to withdrawal.

  1. ATracks costs of a physical asset from acquisition planning through operation to disposal, from the owner's viewpointCorrect
  2. BTracks a product's revenues from launch to decline across markets
  3. CIgnores operating and maintenance costs after purchase
  4. DConsiders only the purchase price paid to the supplier

Explanation

Asset life cycle costing looks at all costs of owning a physical asset: acquisition, installation, operation, maintenance and disposal. Product life cycle costing instead follows a product from R&D to withdrawal. Options ignoring running costs or considering only purchase price understate the scope.

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