Life Cycle Costing; Service Department In the chapter we illustrated the use of the life cycle con- cept 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. Acquisition of IT assets including computers, hubs, cables, and other assets.
2. Acquisition of software and deployment of 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?