Asked by Roselyn Villaruz on May 08, 2024
Verified
Life cycle costing can be used to justify the acquisition of expensive equipment on the basis of lower operating costs over the life of the asset.
Life Cycle Costing
The total cost of ownership of a product or system over its entire lifespan.
Operating Costs
Expenses associated with the day-to-day functions of a business.
- Understand the principle of life cycle costing and its utilization.
Verified Answer
KG
Kailey GendronMay 09, 2024
Final Answer :
True
Explanation :
Life cycle costing takes into account not only the initial acquisition cost of an asset, but also its operating costs over its expected lifespan. By considering the long-term operating costs, it can be demonstrated that a more expensive piece of equipment may actually be more cost-effective over time.
Learning Objectives
- Understand the principle of life cycle costing and its utilization.
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