You are the Director of the Managerial Accounting Department of a mid-sized manufacturer of industrial and consumer products for the 3-D printing industry. The Company is privately held, but requires extensive accounting documents to support various loans from hanks and other financial institutions. The majority of the company shares are held by family members of the founder, who passed away a number of years ago. The son or the founder is the CEO and has been with the company for over 20 years. While he has experience in the business, He is totally dependent upon his staff for advice on accounting matters that impact both external and internal stakeholders.

While the company is positioned to take advantage of the recent interest in the expanding 3-D markets in both the industrial and consumer segments, there are cost pressures being experienced with new entrants into the marketplace. The CEO believes that there’s a critical need to dramatically expand their marketing budget to counter this new competition. The family shareholders want to continue receiving their dividend checks, but the budget is under pressure to provide both the expanded marketing efforts and the dividend payments. The CEO is looking for ways to find the money without borrowing more money.

The CEO is seriously considering cutting costs in the support areas of the company. He is reluctant to reduce the Financial Accounting Department budget due to the requirements of the creditors, but he is looking to dramatically reduce the Managerial Accounting Department since it is primarily used to support internal operations. He’s convinced that most of the functions currently provided by this department can be handled by the Financial Accounting Department.

 

As Director of the Managerial Accounting Department, you strongly disagree with the position of the CEO and believe that he doesn't fully understand the important role your department plays in all aspects of the company. You also don't want to lose your staff and don't want to potentially lose your job. It is your goal to convince him that reducing your department is not a good idea and could permanently damage the company. 

Develop a convincing argument to make your case. You must provide the CEO with a wide list of value-added services your department provides that are critical to the company. This can be done by describing many of the concepts and applications used Managerial Accounting and how they are the foundation for the planning and control function of the company.