Star Videos, Inc., produces short musical videos for sale to retail outlets. The companys balance sheet accounts as of January 1 are given below.

Star Videos, Inc.
Balance Sheet
January 1
Assets
Cash				$	89,200
Accounts receivable					106,600
Inventories:
Raw materials (film, costumes)	$	13,400
Videos in process		47,400
Finished videos awaiting sale		80,400			141,200
Prepaid insurance					8,350
Studio and equipment (net)					610,000
Total assets				$	955,350
Liabilities and Stockholders Equity
Accounts payable				$	238,000
Retained earnings					717,350
Total liabilities and stockholders equity				$	955,350

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 companys 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:

1. Film, costumes, and similar raw materials purchased on account, $229,000.
2. Film, costumes, and other raw materials issued to production, $230,500 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect).
3. Utility costs incurred (on account) in the production studio, $92,600.
4. Depreciation recorded on the studio, cameras, and other equipment, $104,400. Three-fourths of this depreciation related to actual production of the videos, and the remainder related to equipment used in marketing and administration.
5. Advertising expense incurred (on account), $143,000.
6. Salaries and wages paid in cash as follows:

Direct labor (actors and directors)	$	96,000
Indirect labor (carpenters to build sets, costume designers, and so forth)	$	75,500
Administrative salaries	$	103,000

7. Prepaid insurance expired during the year, $7,450 (70% related to production of videos, and 30% related to marketing and administrative activities).
8. Miscellaneous marketing and administrative expenses incurred (on account), $13,850.
9. Studio (manufacturing) overhead was applied to videos in production. The company recorded 7,250 camera-hours of activity during the year.
10. Videos that cost $578,000 to produce according to their job cost sheets were transferred to the finished videos warehouse to await sale and shipment.
11. Sales for the year totaled $954,000 and were all on account.
12. The total cost to produce the videos that were sold according to their job cost sheets was $623,910.
13. Collections from customers during the year totaled $904,000.
14. Payments to suppliers on account during the year, $608,000.
15. Underapplied or overapplied overhead $__?__.

Star Videos, Inc.

Transaction Analysis

For the Year Ended December 31

Cash

Accounts Receivable

Raw Materials

Videos in Process

Finished Goods

Manufacturing Overhead

Prepaid Insurance

Studio & Equipment (net)

=

Accounts Payable

Retained Earnings

Beginning balance @1/1

$89,200

$106,600

$13,400

$47,400

$80,400

$8,350

$610,000

=

$238,000

$717,350

(a)

Raw material purchases

=

(b)

Raw materials used

=

(c)

Utility costs

=

(d)

Depreciation charges

=

(e)

Advertising

=

(f)

Salaries & wages

=

(g)

Prepaid insurance

=

(h)

Miscellaneous marketing

=

(i)

Applied overhead

=

(j)

Transfer completed videos to finished goods

=

(k)

Sales

=

(l)

Transfer finished goods to cost of goods sold

=

(m)

Cash collections from customers

=

(n)

Payment to suppliers

=

(o)

=

Ending balances @ 12/31

=

Prepare a schedule of cost of goods manufactured for the year.

Prepare a schedule of cost of goods sold for the year.

Prepare an income statement for the year.