Business Applications Case 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 the article’s 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 Employees
Annual employee turnover
6%
21%
Labor and overhead cost as a percent of sales
9.8%
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.
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