In a Particular Year, Salmon Arm Mutual Fund Earned a Return

question 26

Multiple Choice

In a particular year, Salmon Arm Mutual Fund earned a return of 16% by making the following investments in asset classes: The return on a bogey portfolio was 12% calculated as follows:
-The total excess return on the managed portfolio was __________.

• A) 2%
• B) 3%
• C) 4%
• D) 5%

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Definitions:

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of a unit of product.

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and generate profit.

Variable Costing

A costing method that only includes variable costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, while fixed costs are expensed in the period they are incurred.

Absorption Costing

An accounting method that includes both variable and fixed manufacturing overhead costs in the cost of a unit of product.