Activity‐based life‐cycle costing in long‐range planning

Edilberto J. Rodríguez Rivero and Jan Emblemsvåg

Review of Accounting and Finance, 2007, vol. 6, issue 4, 370-390

Abstract: Purpose - The aim of the paper is to present and illustrate a new approach for long‐range planning. Design/methodology/approach - Building on well‐tested frameworks such as activity‐based costing (ABC), life‐cycle costing (LCC) and Monte Carlo methods as well as earlier case studies, an approach is developed further and tested using a real‐life case. Findings - The effectiveness of the approach is confirmed using a process‐oriented framework (ABC) and introducing an LCC perspective. Monte Carlo methods are used to handle uncertainty and identify risks and critical success factors. Research limitation/implications - The presented research is a starting‐point for developing a simple approach for budgeting that overcomes many of the problems with traditional budgeting. Practical implications - The paper shows how long‐range planning can be performed in a realistic fashion without ending up in many of the traps of traditional budgeting. Originality/value - The paper presents an approach that can help corporations anticipate the future much more realistically than before.

Keywords: Financial risk; Monte Carlo methods; Budgets; Life‐cycle costs; Business planning (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:eme:rafpps:v:6:y:2007:i:4:p:370-390

DOI: 10.1108/14757700710835041

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