Flow of Costs and Income Statement R-Tunes Inc. is in the business of developing, promoting, and selling musical talent online and with compact discs (CDs). The company signed a new group, called Cyclone Panic, on January 1, 20Y8. For the first six months of 20Y8, the company spent $1,585,500 on a media campaign for Cyclone Panic and $476,000 in legal costs. The CD production began on April 1, 20Y8. R-Tunes uses a job order cost system to accumulate costs associated with a CD title. The unit direct materials cost for the CD is: Blank CD $1.60 Case 0.50 Song lyric insert 0.50 The production process is straightforward. First, the blank CDs are brought to a production area where the digital soundtrack is copied onto the CD. The copying machine can copy 1,080 CDs per hour. After the CDs are copied, they are brought to an assembly area where an employee packs the CD with a case and song lyric insert. The direct labor cost is $0.20 per CD. The CDs are sold to record stores. Each record store is given promotional materials, such as posters and aisle displays. Promotional materials cost $35 per store. In addition, shipping costs average $0.20