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

Author

Listed:
  • Edilberto J. Rodríguez Rivero
  • Jan Emblemsvåg

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.

Suggested Citation

  • Edilberto J. Rodríguez Rivero & Jan Emblemsvåg, 2007. "Activity‐based life‐cycle costing in long‐range planning," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 6(4), pages 370-390, November.
    • Handle: RePEc:eme:rafpps:v:6:y:2007:i:4:p:370-390
    DOI: 10.1108/14757700710835041
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