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
Average hourly wage rate
Employees covered by a health-care plan
Average annual health-care costs per employee
Employees covered by a retirement plan
Average annual retirement costs per employee
Benefits to Costco from Spending More on Emplyees
Costco Sam’s Club
Annual employee turnover
Labor and overhead cost as a percent of sales
Annual sales per square foot
Annual profit per employee
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.