Which of the Following Statements About the Yearly-Rate-Of-Return Method (Also

question 21

Multiple Choice

Which of the following statements about the yearly-rate-of-return method (also known as the Belth method) of calculating the yearly rate of return for a life insurance policy is (are) true?
I.The formula requires the use of benchmark prices per $1,000 of protection.
II.The main drawback of the formula is its complexity,necessitating the use of a computer to calculate the rate of return.

• A)I only
• B)II only
• C)both I and II
• D)neither I nor II

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Definitions:

Standard Cost System

An accounting method that uses standard costs for materials, labor, and overhead to value inventory and cost of goods sold, facilitating variance analysis.

Cost of Goods Sold

The immediate expenses linked to the manufacturing of products a company sells, such as materials and labor.

Adjusted

Modified or changed to correct or alter a previous situation, figure, or account.

Net Operating Income

A measure of a company's profitability, calculated by subtracting operating expenses from operating revenue, excluding taxes and interest.