What Is Life Cycle Costing?

The life cycle cost method is a method for calculating the total costs incurred during the life cycle. It is generally understood as the product production cycle cost method to quantify all costs in the product life cycle. It is worth mentioning that the central link in the design of an enterprise's production system is to systematically measure production factors such as products, assets and labor, and combine them into integrated functional units. Therefore, for assets and labor, the cost structure can also be analyzed using the life cycle cost method.

Life cycle costing

English translation; (Life Cycle Costing, LCC)

The life cycle cost method (LCC) originated from the U.S. Department of Defense's

The life cycle principle of production costs originates in the 1980s and 1990s. At that time, the internal data processing department of the company developed very quickly. Data processing during its normal use cycle

The application of life cycle cost method in enterprises has profound practical significance. Especially the continuous development of science and technology, the high-tech modern production system represented by the computer industry, changing the traditional

According to Blanchard's cost breakdown structure method, the life cycle cost method can be analyzed in the following steps:

Starting from the production characteristics, determine the basic

The life cycle cost method is an important tool for textile enterprises, but it cannot eliminate the entrepreneur's risk. Advanced technology provides unique

The above specific application of the comprehensive life cycle cost method can be concluded that the key to the life cycle cost method is to determine the life cycle and cost classification. For the application of the life cycle cost method in enterprise production, it can also be expressed by the traditional LCC curve in a production system. The determination of the life cycle and cost classification of products, assets, and labor under the life cycle cost method can basically be applied to the "bath curve" and can be slightly changed.

Life cycle cost acquisition stage

This is the beginning of the life cycle, which kicked off the prelude to the production system. Product research and development, initial investment in assets, and labor recruitment are all activities in the acquisition phase. The time span of the acquisition phase varies with the different production factors, but its cost is the highest in the entire life cycle.

Life cycle cost method operation phase

After the production factors are obtained, the next step is the operation and maintenance phase. The product enters the use phase of the customer, the asset faces the trade-off phase of operation maintenance and shutdown maintenance, and the labor force begins to master the labor skills and enters the actual operation phase. The operating phase is a period of relatively low cost and relatively stable life cycle.

Life Cycle Costing Disposal Phase

At the end of the life cycle, it is the disposal phase of production factors. Abandoned disposal at the end of product life, disposal costs at the end of the asset life cycle, and labor-related illness and disability indicate that the life cycle has entered a disposal stage that is no longer profitable, and its disposal costs will increase.