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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.

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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 Finished videos awaiting sale Prepaid insurance Total current assets $ 70,000 109,000 $ 37,000 52,000 88,000 177,000 10,400 366,400 Studio and equipment 744,000 Less accumulated depreciation 217,000 527,000 Total assets $893,400 Liabilities and Stockholders' Equity Accounts payable $189,400 Capital stock $427,000 Retained earnings 277,000 Total liabilities and stockholders' equity 704,000 $893,400 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 $240,000 in manufacturing overhead for an estimated allocation base of 5,000 camera-hours. The following transactions occurred during the year: a. Film, costumes, and similar raw materials purchased on account, $192,000 b. Film, costumes, and other raw materials used in production, $207,000 (80% of this material was considered direct to the videos in production, and the other 20% was considered indirect). c. Utility costs incurred in the production studio, $79,000. d. Depreciation recorded on the studio, cameras, and other equipment, $91,000. 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, $137,000. f. Costs for salaries and wages were incurred as follows: Direct labor (actors and directors) Indirect labor (carpenters to build sets, costume designers, and so forth) Administrative salaries $ 89,000 $117,000) $102,000

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