1. A negotiated budgeting process is:

A) Less effective than an authoritative budget.

B) Less costly to implement than an imposed (i.e., authoritative) budget.

C) A combination of "top-down" and "bottom-up" approaches to budget preparation.

D) An alternative way to express a "bottom-up" approach to budget preparation.

E) Generally completed after one round of negotiation.

2. Which of the following is a limitation of both return on investment and residual income?

A) Measurement issues.

B) Not easily understood by managers.

C) Favors large units.

D) Can lead to goal congruence problems.

E) There is disincentive for high return on investment units to invest.

3. Which of the following is not a consequence of a lack of strategic information?

A) Lack of clarity about direction and goals.

B) Choosing products, markets, or manufacturing processes inconsistent with strategic goals.

C) Decisions based on quality financial information.

D) Failure to identify most profitable products, customers, and markets.

E) Incorrect investment decisions.