Bond Company budgets the following purchases of direct materials for the first quarter of the year:

All purchases of direct materials are made on credit. On average, the company pays for $80\%$ of its purchases in the month of

acquisition and the remainder in the following month. Purchases take place fairly evenly throughout the month.

Required:

For the months of February and March, what are the budgeted cash payments for purchases of direct materials under the

assumption that there is no $($cash$)$ discount for early payment?

For the months of February and March, what are the budgeted cash payments for purchases of direct materials under the

assumption that the purchase terms are $\frac{2}{15},$ net $30?$ The company's policy is to take advantage of all cash discounts for early

payment.

$3$a$.$ Using the purchase terms in Requirement $2,$ calculate the opportunity cost if Bond does not decide to take advantage of the early

payment discount.

$3$b$.$ Can it be considered good economic policy to take advantage of early payment discounts?