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Article Information:
Title:
Activity-based life-cycle costing in long-range planning
Author(s):
Edilberto J. Rodriguez Rivero, Jan Emblemsvag
Journal:
Review of Accounting and Finance
Year:
2007
Volume:
Issue:
Page:
370 - 390
ISSN:
1475-7702
DOI:
10.1108/14757700710835041
Publisher:
Emerald Group Publishing Limited
Document Access:
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:
Budgets, Business planning, Financial risk, Life-cycle costs, Monte Carlo methods
Article Type:
Research paper