Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 43

Life-Cycle Costing; Service Department In the chapter, we illustrated the use of the life-cycle concept for both the cost and sales life cycle of a company's product lines. It can also be useful to extend the cost life cycle to the service department. In Chapter 7, we were interested in the allocation of service department costs to product lines. Here we are interested in managing the costs of a service department over its life cycle. The information technology department (IT) is a good example. The costs incurred in IT have the following phases:
1. Acquire IT assets, including computers, hubs, cables, and other assets.
2. Acquire software and deploy IT for the desired application and functionality.
3. Maintain management and operations of the IT assets.
4. Provide user support.
5. Retire the assets on a planned schedule and replace as needed.
Required How can life-cycle costing help in the management of the IT department