E6.10 (LO 3, 4), AN Business Writing Transitioning from employee to manager has been exciting for Jalen! He enjoys having the responsibility and authority to make decisions, and it is rewarding to join the management team, sharing insights to make better decisions. One of his first responsibilities is to address the DM purchases budget. The company has a strong relationship with its current supplier, but the quality of the supplier's DM has declined. Knowing this, Jalen has already reached out to a different vendozo see what kind of a deal it might offer. The DM information for Jalen's division and for each vendor just described is as follows. • DM on hand as of July 1 slightly exceeds expectations at 1,500 linear board feet. • Each unit requires 4 linear board feet; Jalen is most comfortable if the company has 20% of the following month's production needs on hand. • The cost per linear foot is $6.50 with the current supplier; it's $7.00 with the new vendor. • Planned production for July is 1,800 units; for August is 2,200 units; for September is 2,000 units; and for October is 1,700 units. • The A/P balance related to June DM purchases is $34,125 on July 1. Required en supp ts for each AF TOT BY b. The credit terms with the current supplier allow for 30% to be paid in the month of purchase and 70% in the following month. While this supplier doesn't offer any discount for early payment, Jalen's company has been able to benefit from these terms by waiting until the month following the purchase to pay for most of each purchase. Outline the schedule of cash disbursements for quarter 3 that would accompany these purchases. Present amounts for each month and for the quarter overall. Also identify the A/P balance as of September 30. c. If, instead, Jalen decides to buy his materials from the new vendor, how much more will the purchases cost each month, assuming the same ending inventory requirements? How would this change in suppliers affect monthly cash disbursements? Assume the new vendor offers payment terms of 2/10, net 30. Jalen is committed to receiving the discount. Assume monthly purchases are all made within the first 20 days of the month. Present cash disbursement amounts for each month and for the quarter overall. Also identify the A/P balance as of September 30. d. Assume Jalen decides to go with the new vendor, thus altering the previously planned cash disbursements schedule. Write a brief memo to the controller explaining the situation. Prepare a cash budget for one quarter.