The Role of Activity Cost Drivers in Enhancing Operational Efficiency and Financial Planning: An Analytical Framework for Driver-Based Costing

Abstract

The research aimed to clarify the role of Activity Cost Drivers (DBC) in enhancing operational efficiency and financial planning, by providing an analytical framework that highlights the advantages of this system as a modern accounting approach for cost allocation. A gas bottling and services company was selected as a sample for practical application, given the nature of its industrial activity and its diverse products, allowing for accurate measurement of cost distribution and analysis of its impact on performance. To achieve the research objective, the researcher analyzed the production and service activities within the company, using realistic cost drivers such as operating hours, number of tests, areas, number of employees, and others, in accordance with DBC system requirements. The allocation results using this system were also compared with traditional allocation results, with the aim of evaluating its effectiveness in improving the accuracy of financial information and decision-making. The research reached several conclusions, the most important of which was: "The DBC system showed a high ability to link actual costs to realistic drivers, which helped improve the fairness of allocation among products and supported management decisions." The system also enabled the differentiation of environmental and non-environmental costs, which enhances the institution's ability to implement sustainable practices and identify activities with the highest resource consumption. The research recommended the necessity of adopting the DBC system in industrial institutions as a strategic tool for restructuring cost allocation and improving financial performance. It also emphasized the importance of developing internal accounting systems to be capable of tracking actual cost drivers and providing supporting data for efficient system implementation.