For a Given Employee Group, the Accumulated Benefit Method of Funding

question 83

True/False

For a given employee group, the accumulated benefit method of funding for defined benefit plans results in increasingly larger contributions to the fund over time when compared to both the projected unit credit and level contribution methods.Assume that average salaries increase over time.

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Definitions:

Full Capacity

The maximum level of output that a company can sustain to make a product or provide a service.

Incremental Revenue

The additional revenue generated from a new business activity or decision.

Incremental Processing Costs

Additional costs incurred when increasing the production volume or when processing further beyond the split-off point.

Sell or Process Further

A decision-making process in cost accounting where a company must determine whether to sell a product as is or continue processing to add value.