Question

Although Costco pays its employees substantially more than its closest competitor, Sam’s Club, it has similar financial returns on its labor costs due to which of the following?
a. lower turnover and higher levels of productivity
b. higher turnover and higher levels of employee productivity
c. promotion-from-within policies and better benefits
d. a larger part-time workforce

Answer 1

Although Costco pays its employees substantially more than its closest competitor, Sam’s Club, it has similar financial returns on its labor costs due to lower turnover and higher levels of productivity

Option A

Explanation:

While Costco costs its workers slightly more than its closest competitor, Sam's Club, Costco pays higher prices in order to recruit more professionals and to provide better customer service due to lower turnover and a similar financial return.

Direct costs involve wages for staff making a product and employees on the production line, while indirect costs apply to assistance, such as employees repairing factory equipment.

When labor costs are wrongly distributed or measured, the price of goods or services may be changed from their actual costs and profits from losses.