Page 55 - Microsoft Word - 00 Prelims.docx

Advanced Costing Methods

Market Maturity
development

$ Product Growth
development

Decline

Sales

Profit

Time

9.1 Costs associated with each stage

 Pre-production/Product development stage

– A high level of setup costs will be incurred in this stage (preproduction
costs), including research and development (R&D), product design and
building of production facilities.

 Launch/Market development stage

– Success depends upon awareness and trial of the product by consumers,
so this stage is likely to be accompanied by extensive marketing and
promotion costs.

– Production costs per unit will be extremely high due to the low volumes
involved.

49