Performance Measurement Is Important Because

question 3

Multiple Choice

Performance measurement is important because:

• A) it allows firms to rate competitors.
• B) without it, managers would not know how the global economy is doing.
• C) companies presently operating in the European Economic Community need to understand how its competitors are doing.
• D) lower-level metrics in an organization must connect directly to the high-level performance to achieve goals.

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Definitions:

Negotiated Transfer Price

A transfer price agreed upon by the selling and buying divisions within the same company.

External Market Price

The price at which goods or services are bought and sold outside of a company, determined by the supply and demand in the wider market.

Savings

The portion of income not spent on current expenditures or taxes, often set aside for future use or investment.

Excess Capacity

A scenario where a company's production facilities are capable of producing more than is needed to meet the demand.