Answer (A) is correct.
Life-cycle costing estimates a product’s revenues and expenses over its
expected life cycle. This approach is especially useful when revenues and
related costs do not occur in the same periods. It emphasizes the need to
price products to cover all costs, not just those for production. Hence,
costs are determined for all value-chain categories: upstream (R&D,
design), manufacturing, and downstream (marketing, distribution, and
customer service). The result is to highlight upstream and downstream
costs in the cost planning process that often receive insufficient attention.