Product life cycle costing and an example application including activity based costing

Global competition, the continuous development of production technologies and a marketing environment dominated by consumer preferences has led to the loss of control over product and sale prices. Therefore, business managers have chosen to gain dominance by taking control of product costs.Product life cycle costing method is one of the strategic cost management techniques. This technique is a tool used as a profit-gaining and business cost management strategy, which shows the distribution of each cost element for each product by considering all costs that arise during the entire life cycle of the product. Target costing as well as activity based costing are tools used as a strategic cost management technique that is very beneficial to product life cycle costing method.The main purpose of this study is to help businesses apply an evaluation method which estimates costs, calculates, analizes, reports and presents management to show the control of costs, by providing cost savings and aiming to ensure a maximum profit in order to choose the production of the most profitable product from a series of products.For this study a cost profile was created from the estimate costs arising throughout the entire life cycle of a new product. All product life cycle costing and profits were found through the analysis of the results obtained by the creation of the cost profile.Keywords: Global Competition, Strategic Cost Methods, Product Life Cycle Costing Method, Maximum Profit