Advanced

(a) Life Cycle Costing normally refers to costs incurred by the user of major capital equip¬ ment over the whole of the useful equipment life. Explain the determination and calculation of these costs and the problems in their calculation. (8 marks)

(b) In the strategy and marketing literature there is continual discussion of the product life cycle.

You are required to explain, for each of the four stages of the product life cycle,

• start-up

• growth

• maturity

• harvest, which system of product costing would be most useful for decision making and control, and why.

Explain briefly in your answer possible alter¬ native organizational structures at each stage in the life cycle. (12 marks)

(Total 20 marks) CIMA Stage 4 Management Accounting —

Control and Audit