bk ences Star Videos, Incorporated, produces short musical videos for sale to retail outlets. The company's balance sheet accounts as of January 1 are given below. Star Videos, Incorporated Balance Sheet January 1 Assets Cash Accounts receivable Inventories: Raw materials (film, costumes) Videos in process Finished videos avaiting sale Prepaid insurance $ 89,000 107,600 $10,600 50,600 91,800 153,000 Studio and equipment (net) Total assete Liabilities and Stockholders' Equity Accounts payable Retained earnings Total liabilities and stockholders' equity 10,000 583,000 $942,600 $216,000 726,600 $942,600 Because the videos differ in length and in complexity of production, the company uses a job-order costing system to determine the cost of each video produced. Studio (manufacturing) overhead is charged to videos on the basis of camera-hours of activity. The company's predetermined overhead rate for the year ($40 per camera-hour) is based on a cost formula that estimated $280,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. Any underapplied or overapplied overhead is closed to cost of goods sold. The following transactions were recorded for the year: a. Film, costumes, and similar raw materials purchased on account, $190,000 b. Film, costumes, and other raw materials issued to production, $196,000 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect). c. Utility costs incurred (on account) in the production studio, $88,000. d. Depreciation recorded on the studio, cameras, and other equipment, $110,800. Three-fourths of this depreciation related to actual production of the videos, and the remainder related to equipment used in marketing and administration e. Advertising expense incurred (on account), $170,500 f. Salaries and wages paid in cash as follows: Direct labor (actors and directors) Indirect labor (carpenters to build sets, costume designers, and so forth) Administrative salaries $92,800 $68,000 102,200 g. Prepaid insurance expired during the year, $7,900 (70% related to production of videos, and 30% related to marketing and