Computer Service Inc. is a retail distributor for$$ MZB$-33$ computer hardware and related software and support services. Computer Service prepares annual sales$$ forecasts; the first six months for the year are presented here. Cash sales account for $20\%$ of Computer Service$\text{'}$s total$$ sales, $30\%$ of the total sales are paid by bank credit$$ card, and the remaining $50\%$ are on open account $($Computer Service$\text{'}$s own charge$$ accounts$).$ The cash sales and cash from bank credit card sales are received in the month of the sale. Bank credit card sales are subject to a $2\%$ discount deducted at the time of the daily deposit. The cash receipts for sales on open account are $70\%$ in the month following the sale and $28\%$ in the second month after the sale. The remaining accounts receivable are estimated to be uncollectible.

Computer Service$\text{'}$s $$month$-$end inventory requirements for computer hardware units are$30\%$ of the next$$ month's sales. A$$ one$-$month lead time is required for delivery from the manufacturer.$$ Thus, orders for computer hardware units are placed on the $25$th of each month to ensure that they will be in the store by the first day of the month needed. The computer hardware units are purchased under terms of$$ n$/45($payment in full within $45$ days of$$ invoice$),$ measured from the time the units are delivered to Computer Service. Computer Service$\text{'}$s purchase price for the computer units is $60\%$ of the selling price. Computer Service, Inc.

Sales Forecast for First Six Months

Hardware Sales

Software Sales

Total

Units

Dollars

and Support

Revenues

January

$103$

$$309,000$

$$231,000$

$$540,000$

February

$122$

$366,000$

$144,000$

$510,000$

March

$110$

$330,000$

$150,000$

$480,000$

April

$100$

$300,000$

$115,000$

$415,000$

May

$106$

$318,000$

$132,000$

$450,000$

June

$129$

$387,000$

$193,000$

$580,000$

Total

$670$

$$2,010,000$

$$965,000$

$$2,975,000$

Required

$1.$

Calculate the cash that Computer Service Inc. can expect to collect during April. Be sure to show all of your calculations.

$2.$

Computer Service Inc. is determining how many$$ MZB$-33$ computer hardware units to order on January $25.$

a$.$

Determine the projected number of computer hardware units that will be ordered.

b$.$

Calculate the dollar amount of the order that Computer Service will place for these computer hardware units.

$3.$

As part of the annual budget$$ process, Computer Service prepares a cash budget by month for the entire year. Explain why a company such as Computer Service would do this.