Cameras Limited is a new company whose only operation is the development of a new kind of video camera that will link to home computers and easily allow image transfer. The camera will come with a program to allow editing, so customers can edit their home movies and, for example, airbrush pictures and alter backgrounds. The camera and software are protected by several patents and copyrights, but technology in the area is moving quickly, and competition is Tierce from competing products with different technology.
By the end of 20X6, a prototype existed and was being used to solicit orders. The product itself is due out in the second quarter of 20X7, in time for the Christmas season, which rep-resents the vast majority of the annual camera- buying volume.
In 20X6, various costs were incurred: design costs ($ 675,800), engineering costs ($ 244,600), software development costs ($ 397,500), and market research costs ($ 68,900). Administration costs amounted to $ 670,000. Interest on bank loans was $ 62,500. Legal costs to register patents and copyrights amounted to $ 82,200. In addition, manufacturing equipment costing $ 450,000 was purchased and installed. It was used briefly to manufacture the prototype in the second quarter of 20X6, but is primarily idle and will continue to be idle until the First quarter of 20X7. At that time, production will begin in earnest.

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