Developing Management Accounting Information (DuPont)
Response to the following problem:
The story of E. I. Du pont de Nemours and Company detailed at the beginning of this chapter provides key insights into the development of management accounting. In particular, we see how the structure of a business affects the kinds of information required for planning, controlling, and evaluating purposes. Consider the decision to expand and diversify the company by acquiring its suppliers and creating its own network of sales offices.
What were the potential risks to DuPont of this decision?
What accounting information would have been required to determine if the decision to diversify was successful?
Does the traditional accounting system designed to produce external financial reports provide the required information in an easily obtainable fashion?