No sound at all after kernel panic

So here's my issue:

- Started MacBook Air from sleep

- Kernel panic - message on screen saying that I had to restart my computer by holding the power button

- No sound after restart

- Did nothing out of the ordinary before

- When sound buttons on keyboard are pressed, flashes level indicator but is greyed out and will not change

- Greyed out speaker icon on menu bar

- "No output devices found" in Sound in System Preferences

- Flash videos in all browsers load but only play for around 11 seconds (Chrome, Firefox, Opera) or three seconds (Safari) before stopping, but video is not paused and continues to load

- No red light in headphone jack

- Tried restarting

- Tried starting in Safe Mode

- Tried Apple Hardware Test

- Tried PRAM zap

- Tried repairing permissions

- Tried re-installing OS X Lion

- Tried Software Update

- Tried deleting BezelServices preferences file

- Tried plugging in earphones

- Tried cleaning with OnyX

Hardware issue? How much would it cost to get fixed? Go to Apple store or reseller? Any help would be appreciated. This is really bugging me.