Whole-Life Cost

DEFINITION of 'Whole-Life Cost'

The total cost of owning an aset over its entire life. Whole life cast includes all costs such as design and building costs, operating costs, associated financing costs, depreciation, and disposal costs. Whole-life cost also takes certain costs that are usually overlooked into account, such as environmental impact and social costs.

Also known as a "life-cycle" cost.

BREAKING DOWN 'Whole-Life Cost'

When comparing investment decisions, an analyst must look at all potential future costs, not just acquisition expenses. While most costs can be readily measured or estimated, costs such as environmental or social impact cannot be easily quantified. Nevertheless, whole-life costing may provide a more accurate picture of the true cost of an asset than most other methods.

RELATED TERMS
  1. Cost Accounting

    A type of accounting process that aims to capture a company's ...
  2. Applied Cost

    A term used in cost accounting to denote the cost assigned to ...
  3. Full Costing

    A managerial accounting method that describes when all fixed ...
  4. Cost Of Revenue

    The total cost of manufacturing and delivering a product or service. ...
  5. Operating Cost

    Expenses associated with the maintenance and administration of ...
  6. Unit Cost

    The cost incurred by a company to produce, store and sell one ...
Related Articles
  1. Entrepreneurship & Small Business

    What Are The Different Types Of Costs In Cost Accounting?

    Cost accounting measures several different types of costs associated with a company’s production processes.
  2. Investing

    Explaining Capitalized Cost

    A capitalized cost is an expense associated with a fixed asset that is added to the basis of that asset and expensed over its depreciable life.
  3. Investing

    Explaining Cost Of Capital

    Cost of capital is the cost of funds used to finance a business.
  4. Markets

    Understanding Cost of Revenue

    The cost of revenue is the total costs a business incurs to manufacture and deliver a product or service.
  5. Markets

    What is the Cost of Funds?

    Cost of funds is the interest cost financial institutions pay to use the funds they deploy in their business.
  6. Investing

    What are Acquisition Costs?

    A company can recognize acquisition costs as those costs used to buy property and equipment.
  7. Investing

    What is Incremental Cost?

    Incremental cost is the added cost of manufacturing one more unit.
  8. Markets

    Understanding Marginal Cost of Production

    Marginal cost of production is an economics term that refers to the change in production costs resulting from producing one more unit.
  9. Markets

    Examining Costs Of Goods Sold (COGS)

    Learn more about the costs that go into production.
  10. Investing

    Explaining Cost Control

    For a business, cost control entails managing and reducing expenses.
RELATED FAQS
  1. How are fixed costs treated in cost accounting?

    Learn how fixed costs and variable costs are used in cost accounting to help a company's management in budgeting and controlling ... Read Answer >>
  2. What are the differences between period costs and product costs?

    Find out why GAAP separates all company expenses into either period or production costs and how this impacts the way expenses ... Read Answer >>
  3. What are the different types of costs in cost accounting?

    Learn about the different types of costs associated with cost accounting, such as direct, indirect, fixed, variable and operating ... Read Answer >>
  4. How do fixed and variable costs each affect the marginal cost of production?

    Learn about the marginal cost of production, how to calculate the marginal cost, and how fixed costs and variable costs affect ... Read Answer >>
  5. What is the difference between fixed cost and total fixed cost?

    Learn what a fixed cost is, what a variable cost is, what total fixed costs are, and the difference between a fixed cost ... Read Answer >>
  6. What is the difference between direct costs and variable costs?

    Learn about variable costs and direct costs, how direct costs and variable costs are classified and the differences between ... Read Answer >>
Hot Definitions
  1. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  3. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  4. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  5. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  6. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
Trading Center