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

All purchases of direct materlals 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.

Requlred:

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

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?

Complete this question by entering your answers in the tabs below.

Req $1$

Req$2$

Req $3A$

Req $3B$

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?