Strategic Cost Management Research Assignment

Strategic Cost Management
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Q: What do you understand by the concept of total cost of ownership for a purchased product? Discuss the advantages and disadvantages of using this approach. Total cost of ownership for a purchased product
The total cost of ownership (TCO) for a purchased product refers to the cost of owning the product, including the purchase price paid and other costs like the acquisition costs, usage costs and end-of-life costs (Monczka et al., 2016). As such, the total cost of ownership for a purchased product is higher than the initial purchase price, and includes the upfront costs associated with the product purchase (Monczka et al., 2016). The acquisition costs include the cost of bringing the products to the buyer while the usage costs are the conversion and support cost and the end-of-life costs is the net of amounts received (Monczka et al., 2016).
The advantages and disadvantages total cost of ownership
Advantages
The total cost of ownership approach is an accurate approach to calculate the co...