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FAQ
Is cost an important consideration in product development?
During the early stages of a product development process, an estimate of a product's life cycle cost is essential to determining its profitability. A reliable cost estimation process will make it more likely that the right decision about whether or not to proceed with development will be made.
What is the main purpose of products costing?
Product costing is intended to determine the cost of a unit of production (or of a service delivered) by study of every resource used in its creation.
How do costs influence the profitability of a business?
Reducing costs increases profitability, but only if sales prices and number of sales remain constant. If cost reductions result in a lowering of quality, then the company may be forced to reduce prices to maintain the same level of sales.
