The Evolution of Management AccountingThe Evolution of Accounting and Business from 1950 to 1995During the period from 1950 to 1995, DuPont's return on equity model was been widely used by US companies. F. Donaldson Brown and an electrical engineer who joined DuPont in 1914 in the Treasury Department developed the model. The model, often presented as a flowchart, is: Return on Assets = Net Profit Margin multiplied by Total Asset Revenue. A simple enough formula, but the accurate collection of financial data is the fundamental challenge of account management that continues to this day. Activity-based costing was first clearly defined in 1987 by Robert S. Kaplan and W. Bruns as a chapter in their book Accounting and Management. : A field study perspective. They initially focused on the manufacturing industry, where increased technology and productivity improvements reduced the relative proportion of direct labor and material costs but increased the relative proportion of indirect costs. For example, increased automation has reduced labor, which is a direct cost, but increased depreciation, which is an indirect cost. The challenge was to allocate indirect costs more precisely. Peter F. Drucker (November 19, 1909 – November 11, 2005) was a writer, business consultant, and self-described “social ecologist.”[1] Widely considered the father of “modern management,” several ideas run through most of Drucker's writings: • Decentralization and simplification. Drucker ignored the command-and-control model and argued that companies work better when they are decentralized. According to Drucker, companies tend to produce too many products, hire employees they don't need (when a better solution would be outsourcing), and expand into economic sectors they should avoid. • A deep skepticism about macroeconomic theory. Drucker argues that economists of all schools fail to explain significant aspects of modern economies. • Respect for the worker. Drucker believed that employees were assets and not liabilities. He taught that knowledge workers are the essential ingredients of the modern economy. • A belief in what he called “the disease of government.” Drucker even-handedly argued that government is often unable or unwilling to provide new services that people need or want, although he believes this condition is not inherent in democracy. • The need for "planned abandonment". Businesses and governments have a natural human tendency to cling to “yesterday's successes” rather than see when they are no longer useful. • The need for community. Early in his career, Drucker predicted the "end of economic man" and advocated the creation of a "plant community" in which the social needs of individuals could be met.