(Accounting for by products) Thompson EDP provides computing services for its commercial clients. Records for clients are maintained on both computer files and paper files. After 7 years, the paper records are sold for recycling material. The net realizable value of the recycled paper is treated as a reduction to operating overhead. Data pertaining to operations for 2000 follow:
|
Estimated operating overhead |
$400,500 |
|
Estimated CPU time (hours) |
35,000 |
|
Estimated net realizable value of recycled paper |
$20,400 |
|
Actual operating overhead |
$399,500 |
|
Actual CPU time |
34,200 |
|
Actual net realizable value of recycled paper |
$19,588 |
a. What was the company’s estimated predetermined overhead rate?
b. What journal entry should the company make to record the sale of the recycled paper?
c. What was the company’s underapplied or overapplied overhead for 2000?