Which of the following statements is incorrect?
A) A continuous twelve-month budget results from dropping the month just ended and adding a future month.
B) The production budget is derived from the direct materials and direct labor budgets.
C) The cash budget shows anticipated cash flows.
D) In the budget process for not-for-profit organizations the emphasis is on cash flow rather than on revenue and expenses.

Question

Quizplus · Accepted Answer

The production budget is actually derived from the sales budget, not from the direct materials and direct labor budgets. The sales budget is the starting point that determines how many units need to be produced, which in turn affects the direct materials and direct labor budgets.

Which of the Following Statements Is Incorrect