Business Studies

Each reply must be a paragraph long of at least 135 words or more not including references which should supported by citing at least 2 peer-reviewed journal articles between 2017-2021 for each reply. The 2 discussions that need reply will be posted below. Your replies must be in current APA format and must include a reference list. Make sure that you are adding new and relevant information with each reply. Reference sample make sure to include DOI-Drollinger, T., Comer, L. B., & Warrington, P. T. (2006). Development and validation of the active empathetic listening scale. Psychology & Marketing, 23(2), 161-180. https://doi.org/10.1002/mar.20105

Reply 1: The Life Cycle Cost (LCC) examines a wide scope of product longevity, analyzing long-term potential, and providing a holistic look at the expanse of the product or service (Blocher et al., 2022). By providing such an in-depth perspective, total life cycle costs can be reimagined to mitigate higher service costs and marketing during the life cycle. While this methodological approach appears to be an organized and proactive tool, Kambanou (2020) indicated that LCC is an underutilized process. With a multifaceted approach, LCC can be tailored to meet the needs of industry specific life-cycle analyses however, as Kambanou (2020) asserted, LCC is often over-customized, reducing the intent of the process.

Further research indicated that the use of LCC may be underutilized or over-reduced due to being a more modern approach that differs from current or common practice (Kambanou, 2020). An example of this theory comes from a three-year case study where LCC was implemented as a companion piece to Life Cycle Management (LCM). LCC was used to impart strategic decisions and advance the intent of LCM. However, despite this adaptation, the use of LCC had no long-term, sustainable objective (Kambanou, 2020).

That is not to say that LCC is never used. Per Swiderski and Rolek (2021), due to the competitive nature associated with globalization, all tools to further economic advancement should be considered. This is specifically germane to advances in computer science, where new assets or improved systems are constantly being developed. However, the focus should not be specific to initial cost of these new developments alone. LCC can be implemented as a comprehensive, cost-efficient assessment that considers all costs from initial investment, through to operation and decommissioning (Swiderski & Rolek, 2021).

LCC is also used with the Department of Defense for military procurement as well as in the construction industry to help facilitate building growth and operation. Per Vlachy (2014), 70 to 90 percent of total life cycle costs are a result of the design phase. In a construction context, six to eight years after initial manufacturing, costs to operate buildings are almost as high as the original construction cost. As such, LCC not only helps to mitigate acquisition and purchasing decisions, but it is also a valuable tool to facilitate long-term operations (Vlachy, 2014).

Per Keller and Alsdorf (2012), people may consider their work fruitless. For example, they may be happy with the quality of work produced however, the results may not be of their desired standard. As Keller and Alsdorf (2012) posited, a singer may show exceptional skill and promise however, they may lack the marketing wherewithal to promote themselves into both fame and fortune. This is much like the limitations involved with LCC. As the research showed, not only is this method an underutilized process, it can also be distorted and not used to the level of sophistication and production needed for optimal organizational results. Per Romans 8:28, “And we know that for those who love God all things work together for good, for those who are called according to his purpose” (The Message, 2003).

References

Blocher, E., Stout, D., Juras, P., & Smith, S. (2022). Cost management: A strategic emphasis (9th ed.). Boston, MA: Richard D. Irwin, Inc.

Kambanou, M. L. (2020). Life cycle costing: Understanding how it is practised and its relationship to life cycle management. Sustainability, 12(8), 1-20. http://dx.doi.org/10.3390/su12083252 (Links to an external site.)

Keller, T., & Alsdorf, K. L. (2012). Every good endeavor: Connecting your work to God’s work. New York, NY: Penguin Random House LLC.

Swiderski, W., & Rolek, W. (2021). A model of product life cycle cost management based on the example of the Spartan Multimedia Shooting Training System. Economies, 9(2), 1-10. http://dx.doi.org/10.3390/economies9020090 (Links to an external site.)

The Message. (2002). Nav Press. (Original work published in 1993)

Vlachy, J. (2014). Using life cycle costing for product management. Journal of Contemporary Management Issues, 19(2), 205-218.

Reply 2:
Budgets are used to plan out the use for financials in a company. Budgeting is used by management to anticipate ad develop strategies for problems in an organization that a company might come across. From a commercial standpoint, managers will budget for an upcoming period to allocate a certain amount of funds in specific departments. Budgets are used so a specific department will avoid overspending. Such as, if travel is a necessity but no travel budget, employees could over travel with losing money if they don’t bring in revenues. The goal is to not overspend and have a bottom line that is less than anticipated. Budgeting helps with creating a structured balance sheet for a company. In the book of Luke, “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? For if you lay the foundation and not able to finish it, everyone who sees it will ridicule you, saying, ‘This person began to build and wasn’t able to finish’” (NIV, Luke). Companies can relate to Luke with his instructions on budgeting. If a company has a goal to build a new building for storage with no funds, then that project won’t be obtainable. If they set a goal to sell so many products in the upcoming months to get the funds for the project that is an example of budgeting.

Budgeting is a disciple that companies use to strengthen companies’ larger end goals. Discipline and honesty are two characteristics that derive from budgeting. A manager that is selfless will be honest about the funds they have spent and stick to the plan. A study was recently conducted on managers’ reporting and whether they were honest. More times than not, managers lie to make their pay off seem larger than it truly is. This report found that the mood state that the manager was in can affect their honesty on budget reporting (Altenburger, 2021). The article writes, “The findings suggest that in practice, organizations can benefit from paying attention to the mood of their managers as a positive mood potentially increases budget reporting honesty” (Altenburger, 2021). So not only is budget reporting important, but the state of mood the manager is in to show complete accuracy. Different elements that play a role in creating a budget are budget process diagrams, accounting spreadsheets with detailed budget line items, engineering photographs of capital projects sites, videos explaining tax policy, and municipal web pages (Corrigan, 2018).

Another financial technique that is related to financial planning is target costing. Target costing is used to help companies plan. It is specifically used to center in on the price of a product. This is typically more well-known for a product than a service. The five steps of target pricing include target cost definition, target cost decomposition step, target cost analysis, target cost realization step, and target cost control activities (target costing). The purpose of target costing is to not only get a standard cost for the product but should be able to transcend into the market phase meeting the target costing (target costing). Target costing can be used with budgeting. It will help create a pricing that will be able to forecast the number of products sold and the cost of the product for the revenue and expenses in the balance sheet and income statement.

Ahn, H., Clermont, M., & Schwetschke, S. (2018). Research on target costing: past, present and future. Management Review Quarterly, 68(3), 321–354. https://doi.org/10.1007/s11301-018-0141-y (Links to an external site.)

Altenburger, M. (2021). Mood and honesty in budget reporting. Management Accounting Research, 50, 100707. https://doi.org/10.1016/j.mar.2020.100707 (Links to an external site.)

Corrigan, L. T. (2018). Budget making: The theatrical presentation of accounting discourse. Critical Perspectives on Accounting, 55, 12–32. https://doi.org/10.1016/j.cpa.2017.12.001 (Links to an external site.)

Life application Bible: New international version. (1991). Wheaton, IL: Tyndale. NIV study Bible.

ANSWER

The Life Cycle Costs

The Life cycle costs is an approach that is utilized in assessing the total costs of an asset within its life cycle which includes its capital costs, operating costs, maintenance costs, and the residual value of the asset at the end of its life. I agree with the post that LCC examines the longevity of a product by analyzing the long-term potential and offers a holistic look at the expenses of the service and product. Considerably, in the current business environment raising and utilizing funds has become so costly. However, I agree with idea that LCC is underutilized since it’s a more modern approach that differs from the common practice (Kambanou, 2020). There are some contradictions of life cycle cost analysis great theoretical achievements and the rare application of LCC in practice. Studies have indicated that incorrect management was the main problem.  However, this does not mean that LCC is not used. LCC has been used by the construction industry and Department of Defense for Military procurement. For instance, Moins et al., (2020) show how LCC has been utilized in road engineering.

Budgeting

Budgeting allows the creation of a spending plan for finances. Budgets are management tools that are globally acknowledged for their capacity to support efficient management of finances and resources and planning.  I agree with the post that budgets have been used to plan out the utilization of finances in a company (Corrigan, 2018). It’s also used by the management to predict and develop strategies for problems within the organization. This prevents certain departments from overspending thus creating a structured balance sheet for the organization. Budgeting has been used by companies to boost their goals. Kenno, Lau, Sainty, and Boles (2020) revealed that institutions rely on budgeting for multiple reasons such as financial control, regulatory compliance, and strategic planning. Target costing has also been an essential financial planning tool that is used by companies to estimate the product costs and subtract from the desired profit margin. It assists a business in determining the price based on external factors. Target costing can be used with budgeting to determine the expenses and costs of a product.

References

Corrigan, L. T. (2018). Budget making: The theatrical presentation of accounting discourse. Critical Perspectives on Accounting, 55, 12–32. https://doi.org/10.1016/j.cpa.2017.12.001 (Links to an external site.)

Kambanou, M. L. (2020). Life cycle costing: Understanding how it is practiced and its relationship to life cycle management. Sustainability, 12(8), 1-20. http://dx.doi.org/10.3390/su12083252 (Links to an external site.)

Kenno, S., Lau, M., Sainty, B., & Boles, B. (2020). Budgeting, strategic planning, and institutional diversity in higher education. In Studies in Higher Education (Vol. 46, Issue 9, pp. 1919–1933). Informa UK Limited. https://doi.org/10.1080/03075079.2019.1711045 (Links to an external site.)

Moins, B., France, C., Van den bergh, W., & Audenaert, A. (2020). Implementing life cycle cost analysis in road engineering: A critical review on methodological framework choices. In Renewable and Sustainable Energy Reviews (Vol. 133, p. 110284). Elsevier BV. https://doi.org/10.1016/j.rser.2020.110284 (Links to an external site.)