Supreme Videos, Incorporated, produces short musical videos for sale to retail outlets. The company's balance sheet accounts as of January 1, are given below. Supreme Videos, Incorporated Balance Sheet January 1 Assets Current assets: Cash Accounts receivable Inventories: Raw materials (film, costumes) Videos in process $ 68,000 107,000 $ 35,000 Finished videos awaiting sale 25,000 86,000 146,000 10,000 Prepaid insurance Total current assets Studio and equipment Less accumulated depreciation Total assets Liabilities and Stockholders' Equity 740,000 215,000 331,000 525,000 $ 856,000 Accounts payable Capital stock Retained earnings $ 425,000 275,000 $ 156,000 700,000 Total liabilities and stockholders' equity $ 856,000 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 $360,000 in manufacturing overhead for an estimated allocation base of 9,000 camera-hours. The following transactions occurred during the year: a. Film, costumes, and similar raw materials purchased on account, $190,000. b. Film, costumes, and other raw materials used in production, $205,000 (85% of this material was considered direct to the videos in production, and the other 15% was considered indirect). c. Utility costs incurred in the production studio, $77,000. d. Depreciation recorded on the studio, cameras, and other equipment, $89,000. 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, $135,000. 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 $ 87,000 $ 115,000 $ 100,000