Companies operating in an advanced manufacturing environment are finding that about 90

per cent of a product’s life cycle cost is determined by decisions made early in the cycle.

Management accounting systems should therefore be developed that aid the planning and

control of product life cycle costs and monitor spending at the early stages of the life cycle.

(Statement paraphrased from a well-known accounting text)

Requirements

Having regard to the above statement:

(a) explain the nature of the product life cycle concept and its impact on businesses operating

in an advanced manufacturing environment;

(b) explain life cycle costing and state what distinguishes it from more traditional management

accounting practices;

(c) compare and contrast life cycle budgeting with activity-based management; identify and

comment on any themes that the two practices have in common.