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Chapter 16

The purpose of performance

measurement

1.1 What is performance measurement?

Performance measurement is the monitoring of budgets or targets against actual
results to establish how well the business and its employees are functioning as a
whole and as individuals.

Performance measurement is a very important aspect of management accounting.
Management accountants get involved in:

 setting targets

 measuring the actual performance against those targets

 providing information to management regarding the outcome.

This information will be used by management to make decisions about the
organisation.

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