1. Which of the following is correct about the benefits and limitations of the budgeting process?

a) Budgeting is of little value in identifying potential process bottlenecks.

b) Budgeting makes it more difficult to coordinate the activities of the entire organization.

c) It forces managers to think about and plan for the future.

d) Managers are held responsible for items they can, and cannot, actually control to a significant extent.

2. Which of the following is the best predictor of the impact on net operating income from a small change in sales for a particular segment?

a) Contribution margin ratio

b) Segment margin

c) Ratio of the segment margin to sales

d) Sales minus segment fixed costs