Week 7

Question 1

Types of financial performance measures

Answer 1

• Revenue, costs, profit, return on investment, performance relative to competitors
• ABC, Operating Income, Market Share

Question 2

Types of non-financial performance measures

Answer 2

• Quality, satisfaction, outcome of achievement
• Examples - customer satisfaction, return customers, product defect rates, education or health

Question 3

How do firms set prices?

Answer 3

• Cost plus pricing - a markup on the cost of the good or service
• Target costing - working backward from what the market will bear to determine an acceptable product cost