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Life cycle costing: incorporating some non-traditional variables

Life cycle costing: incorporating some non-traditional variables
Life cycle costing: incorporating some non-traditional variables
Previous applications of the life cycle costing concept have approached the task as a mere extension of ‘conventional’ discounted cash flow. So while attempts have been made to identify all relevant variables over the entire lifespan of proposed capital investments, and subsequently attribute estimates to them, analyses have nevertheless stayed very much within the quantitative domain. This paper suggests it is possible to adopt a more sophisticated approach whereby qualitative elements of the decision are also incorporated into the analysis. Taking the example of a European commercial vehicle manufacturer operating in a developing country, it demonstrates the initial calculation of the crucial measure of cost per tonne/kilometre. It then goes on to indicate how, even in those cases where such a figure initially appears unattractive versus the offering of a competitor, the result can be ‘turned round’ to become the favoured alternative when other, less-quantifiable, factors are incorporated into the analysis.
1321-7348
73-80
Woodward, D.
2033180f-0bcd-45e7-91dd-92b673e2ae72
Woodward, D.
2033180f-0bcd-45e7-91dd-92b673e2ae72

Woodward, D. (1970) Life cycle costing: incorporating some non-traditional variables. Asian Review of Accounting, 13 (1), 73-80. (doi:10.1108/eb060783).

Record type: Article

Abstract

Previous applications of the life cycle costing concept have approached the task as a mere extension of ‘conventional’ discounted cash flow. So while attempts have been made to identify all relevant variables over the entire lifespan of proposed capital investments, and subsequently attribute estimates to them, analyses have nevertheless stayed very much within the quantitative domain. This paper suggests it is possible to adopt a more sophisticated approach whereby qualitative elements of the decision are also incorporated into the analysis. Taking the example of a European commercial vehicle manufacturer operating in a developing country, it demonstrates the initial calculation of the crucial measure of cost per tonne/kilometre. It then goes on to indicate how, even in those cases where such a figure initially appears unattractive versus the offering of a competitor, the result can be ‘turned round’ to become the favoured alternative when other, less-quantifiable, factors are incorporated into the analysis.

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More information

Published date: 1 January 1970

Identifiers

Local EPrints ID: 36617
URI: http://eprints.soton.ac.uk/id/eprint/36617
ISSN: 1321-7348
PURE UUID: 507f34be-c85a-45fb-8f07-52e6bdb3a6a6

Catalogue record

Date deposited: 28 Aug 2008
Last modified: 17 Jul 2017 15:44

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