Jay Flexford, president of lesl, was just concluding a budget meeting with his senior staff. It was November of 2013, and the group was discussing preparation of the firm's master budget for 2014. "I've decided to go ahead and purchase the industrial robot we've been talking about. 1We'll make the acquisition on January 2 of next year, and I expect it will take most of the year to train the personnel and reorganize the production process to take full advantage of the new equipment" In response to a question about financing the acquisition, Fiexford replied as follows: "The robot will cost $950,000. There will also be an additional $50,000 in ancillary equipment to be purchased. We'll finance these purchases with a oneyear $1,000,000 loan from Shark Bank and Trust Company. I've negotiated a repayment schedule of four equal installments on the last day of each quarter. The interest rate will be 10 percent, and interest payments will be quarterly as well." With that the meeting broke up, and the budget process was on. Photo Artistry Company is a manufacturer of metal picture frames. The fin'n's two product lines are designated as 8 (small frames; 5 x 7 inches) and L (large frames; 8 x 10 inches). The primary raw materials are flexible metal strips and Qinch by 24inch glass sheets. Each 8 frame requires a 2foot metal strip; an L frame requires a 3foot metal strip. Allowing for normal breakage and scrap glass, the company can get either four 8 frames or two L frames out of a glass sheet. Other raw materials, such as cardboard backing, are insignificant in cost and are treated as indirect materials. Emily Jackson, Photo Artistry's controller, is in charge of preparing the master budget for 2014. She has gathered the following information