Question

What is the purpose of developing a master budget for a merchandising organization like Peyton Department Store?

1) To plan and allocate resources for the second quarter of 2010
2) To track and analyze sales revenue for selected months in 2010
3) To calculate operating expenses and determine profitability
4) To manage cash flow and ensure a minimum cash balance

Answer 1

The purpose of developing a master budget for a merchandising organization like Peyton Department Store is to manage cash flow, allocate resources, and determine profitability.

Step-by-step explanation:

The purpose of developing a master budget for a merchandising organization like Peyton Department Store is to manage cash flow and ensure a minimum cash balance. By creating a budget, the organization can plan and allocate resources for a specific period, such as the second quarter of 2010. Additionally, the master budget helps calculate operating expenses and determine profitability, allowing the store to make informed financial decisions.