Star Videos, Inc., produces short musical videos for sale to retail outlets. The company's balance sheet accounts as of January 1 are given below. Assets Cash Accounts receivable Inventories: Star Videos, Inc. Balance Sheet Raw materials (film, costumes) Videos in process Finished videos awaiting sale Prepaid insurance Studio and equipment (net) January 1 Total assets Liabilities and Stockholders' Equity Accounts payable Retained earnings Total liabilities and stockholders' equity $ 78,600 103,400 $19,000 62,600 84,400 166,000 9,250 610,000 $ 967,250 $ 175,000 792,250 $ 967,250 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, $216,500. b. Film, costumes, and other raw materials issued to production, $225,500 (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, $87,000. d. Depreciation recorded on the studio, cameras, and other equipment, $109,200. 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), $135,000. f. Salaries and wages paid in cash as follows: