Economics · Management Accounting
A financial analyst is evaluating the Life Cycle Costing (LCC) for a digital lending platform with the following estimated costs and revenues: - Pre-launch R&D: INR 5 Crore - Launch and Marketing (Year 1): INR 2 Crore - Operational and Maintenance Costs: INR 0.8 Crore per year for 10 years - Decommissioning Cost: INR 1 Crore - Cumulative Revenue over 10 years: INR 20 Crore Based on Life Cycle Costing concepts, which statement is true?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1LCC provides insight into the total project cost from inception to abandonment; Life Cycle Profit is INR 8 Crore less than Operational Profit.✓
- 2LCC excludes R&D costs; Life Cycle Profit is INR 7 Crore.
- 3LCC focuses purely on short-term production; Life Cycle Profit is INR 16 Crore.
- 4LCC only considers manufacturing costs; Life Cycle Profit is INR 12 Crore.
Correct answer
LCC provides insight into the total project cost from inception to abandonment; Life Cycle Profit is INR 8 Crore less than Operational Profit.
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