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Financial versus managerial accounting An article in the April 12 2004 edition of BusinessWeek The Costco Way—Higher Wages Mean Higher Profits compared Costco Wholesale Corporation data with

Financial versus managerial accounting An article in the April 12, 2004, edition of BusinessWeek, “The Costco Way—Higher Wages Mean Higher Profits” compared Costco Wholesale Corporation data with Wal-Mart’s Sam’s Club data. The tables below present some of the data used to support this claim.

How Costco Spends More on Employees

 

Costco

Sam’s Club

Average hourly wage rate

$15.97

$11.53

Employees covered by a health-care plan

82%

47%

Average annual health-care costs per employee

$5,735

$3,500

Employees covered by a retirement plan

91%

64%

Average annual retirement costs per employee

$1,330

$747

 

Benefits to Costco from Spending More on Emplyees

     
 

Costco

Costco Sam’s Club

Annual employee turnover

6%

21%

Labor and overhead cost as a percent of sales

9.80%

17%

Annual sales per square foot

$795

$516

Annual profit per employee

$13,647

$11,039

 

Required

a. Is the information in the tables above best described as primarily financial accounting data or managerial accounting data in nature? Explain.

b. Provide additional examples of managerial and financial accounting information that could apply to Costco.

c. Explain why a manager of an individual Costco store needs different kinds of information than someone who is considering lending the company money or investing in its common stock.

Jul 01 2020 View more View Less

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