Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company's balance sheet accounts as of January 1, are given below. Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash Accounts receivable Inventories: Raw materials (film, costumes) Videos in process $ 64,000 103,000 $ 31,000 Finished videos awaiting sale 46,000 82,000 159,000 Prepaid insurance Total current assets 9,200 335,200 Studio and equipment 732,000 Less accumulated depreciation 211,000 521,000 Total assets $856,200 Liabilities and Stockholders' Equity Accounts payable $164,200 Capital stock $421,000 Retained earnings 271,000 Total liabilities and stockholders' equity 692,000 $856,200 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 is based on a cost formula that estimated $270,000 in manufacturing overhead for an estimated allocation base of 6,000 camera-hours. The following transactions occurred during the year: a. Film, costumes, and similar raw materials purchased on account, $186,000. b. Film, costumes, and other raw materials used in production, $201,000 (80% of this material was considered direct to the videos in production, and the other 20% was considered indirect). c. Utility costs incurred on account in the production studio, $73,000. d. Depreciation recorded on the studio, cameras, and other equipment, $85,000. Three-fourths of this depreciation related to production of the videos, and the remainder related to equipment used in marketing and administration. e. Advertising expense incurred on account, $131,000.