Sheet1

Life cycle costing

Year 1 Year 2 Year 3

R&d costs 160000
Product design costs 800000
Administration costs 200000 900000 1500000
Marketing costs 1200000 1000000 1750000
Manufacturing costs:
Variable costs 4000000 8400000 12400000 -8600000
Fixed costs 650000 1290000
Distribution costs:
Variable costs 400000 900000
Fixed costs 120000 120000
Selling costs:
Variable costs 300000 640000
Fixed costs 180000 180000
Total costs 2360000 7550000 14780000 24690000
Total units 300000
Total costs per unit 82.3

New life cycle costs

Learning curve
Y= Ax^b
Y=0.5*100^-0.0740005
Y= 0.36
otal hours for 100 units 36
Total costs for 100 unit 853
For 99 units
Y= 0.5*99^-0.0740005
y= 0.36
Total hours for 99 units 35

Hour for subsequent uni 0.33

labour costs 12 13
other variable cost 28 29

Labour costs
Year 1:
For first 100 units 36
For remaining 99900 un 32,967
Year 2:
For 200000 66000

Year 2 Year 3
New manufacturing costs

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Variable costs:
labour costs 792,061 1716000
other variable cost 2800000 5800000
3,592,061 7516000 11,108,061
Total life cycle cost from (a) 24690000
Less: variable manufac -4000000 -8400000 -12400000
23,398,061
Total units 300000
New life cycle cost per unit 77.99

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