ACCA Applied Skills · Performance Management · Life-cycle costing
Which of the following costs would normally be incurred in the pre-production (development) phase of a product's life cycle rather than in the production phase?
Research and design costs are incurred in the pre-production phase, before any units are made. Direct labour, distribution and warranty repairs all arise later, once the product is being produced, sold or serviced.
- AResearch and design costsCorrect
- BDirect labour for each unit made
- CDistribution costs of finished goods
- DWarranty repairs after sale
Explanation
Research, design and development costs are incurred before production starts. Direct labour and distribution occur during production and sales, and warranty costs arise after sale. Life-cycle costing aims to capture these early costs, which traditional annual reporting may bury.
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