This is the most vital step of LCC analysis. It involves calculation of all the costs elements of each of the options that are in consideration. This ensures that the persons involved can be able to assess and determine differences in the costs of the options even at smallest levels.

For instance in this stage, if the good in question is a machine the buyers can be able to determine not only the total costs of the machine but also the costs of their various spare parts and therefore they eventually can make the right decision of purchasing the most cost efficient commodity.

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