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

Edilberto J. Rodríguez Rivero (Accounting Department, Extremadura University, Badajoz, Spain)
Jan Emblemsvåg (Fora Form AS, Mosflatevegen, Ørsta, Norway)

Review of Accounting and Finance

ISSN: 1475-7702

Article publication date: 6 November 2007

2609

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

Citation

Rodríguez Rivero, E.J. and Emblemsvåg, J. (2007), "Activity‐based life‐cycle costing in long‐range planning", Review of Accounting and Finance, Vol. 6 No. 4, pp. 370-390. https://doi.org/10.1108/14757700710835041

Publisher

:

Emerald Group Publishing Limited

Copyright © 2007, Emerald Group Publishing Limited

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