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

January February March

Budgeted purchases $$145,000$ $$106,000$ $$120,000$

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:

$1.$ 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.

$3$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?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?

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

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.

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