Question 1: True / False Questions

1. A risk with target costing is that cost reductions may affect the perceived value of the product. 2. An effective way of reducing the projected cost of a new product is to simplify the design. 3. The value of target costing depends on having reliable estimates of sales demand. 4. An important use of life cycle costing is to decide whether to go ahead with the development of a new product. 5. Life cycle costing encourages management to find a suitable balance between investment costs and operating expenses. 6. Target costing may be applied to services that are provided free of charge to customers, such as costs of call centre handling. 7. A product is usually most profitable during the growth phase of its life cycle. 8. Life cycle costing is useful for deciding the selling price for a product. a