OPTIMISING FINANCIAL TRANSPARENCY AND PROFITABILITY: INTEGRATING ACTIVITY-BASED COSTING WITH FINANCIAL REPORTING QUALITY IN IRAQ’S MANUFACTURING SECTOR

Abstract

This study examines the influence of different joint cost allocation techniques on pricing within Iraq’s retail sector, emphasising the role of outdated approaches in diminishing competitiveness and profitability. The research primarily assesses the effects of advanced allocation techniques, namely Sales Value at Split-Off (SVS), Net Realisable Value (NRV), and Physical Measures (PM), on pricing and financial outcomes, comparing them with traditional practices. A quantitative methodology was employed, utilising structured questionnaires administered to 380 store managers across major Iraqi cities. The data were analysed through descriptive statistics and regression analysis to determine the extent to which each allocation approach influenced pricing outcomes. The findings revealed that SVS had a significant positive effect on pricing, with market value-based pricing contributing to improved profit margins. In contrast, NRV and PM demonstrated weak or statistically insignificant relationships with pricing performance, suggesting limited suitability in rapidly changing retail environments. The results underscore the advantages of value-oriented allocation approaches that account for market dynamics, enabling retail managers to set more competitive prices. From a policy perspective, the study advocates for modernising accounting practices and incorporating information technology in cost management, particularly in developing economies such as Iraq.