Performance measurement nad service costing

Performance measurement

1. Performance measures and service costing

2. Performance measures (profit making entity) Financial measures gross profit margin (gross profit/sales x100) net profit margin (net profit/sales x 100) return on capital employed (ROCE) (net profit /capital employed x 100) asset turnover (sales/capital employed) Residual income(net profit – notional interest) Slide 3

3. Performance measures ( NPO) value for money for the organisation is measured by; Economy(best quality a lowest price) Efficiency(minimising wastage/losses) and Effectiveness(achieving set goals) in using of resources Slide 4

4. Slide 5 Service costing No tangible product Simultaneous service Perishability Heterogeneous Service costing v. other product costing Cost of direct materials is small Unit cost is difficult to calculate Costing will vary from one service to another

5. Slide 6 Cost per unit Cost per unit = Total costs for a period Number of service units in the period ______________________________ But what is a service cost unit ?