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Please see attached: Bond Company budgets the following purchases of direct materials for the first quarter of the year: January $150,000 February $110,000 March $123,000
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Bond Company budgets the following purchases of direct materials for the first quarter of the year: January $150,000 February $110,000 March $123,000 Budgeted purchases All purchases of direct materials are made on credit. On average, the company pays 80% of its purchases in the month of sales and the remainder in the following month. Required: 1. 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? 2. 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 2/15, net 30? The company's policy is to take advantage of all cash discounts for early payment. 3a. Using the purchase terms in Requirement 2, calculate the opportunity cost if Bond does not decide to take advantage of the early payment discount. 3b. 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. Reg 1 Req 2 Req 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? February March Budgeted cash payment Complete this question by entering your answers in the tabs below. Reg 1 Req 2 Req Req 3B 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 2/15, net 30? The company's policy is to take advantage of all cash discounts for early payment. February March Budgeted cash payment Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req Req 3B Using the purchase terms in Requirement 2, calculate the opportunity cost if Bond does not decide to take advantage of the early payment discount. (Enter your answer as a percent rounded to 2 decimal places (i.e. .1234 = 12.34%) Opportunity cost Complete this question by entering your answers in the tabs below. Reg 1 Rega Req 2 Rega Rea 3a Req Reg 38 Req 3B Can it be considered good economic policy to take advantage of early payment discountsStep by Step Solution
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