(Accounting for by-products) Bolton-Holifield EDP provides computing ser¬ vices for its commercial clients. Records for clients are maintained on both computer files and paper files. After seven years, the company sells the pa¬ per records for recycling material.

The net realizable value of the recycled paper is treated as a reduction to operating overhead. Data pertaining to operations for 2006 follow:

a. Assuming that CPU time is the allocation base, what was the company’s 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 2006? LO1.

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Budgeted operating overhead $199,250 Actual operating overhead $199,750 Budgeted net realizable value of recycled paper $9,200 Actual net realizable value of recycled paper $9,794 Budgeted CPU time (hours) 70,000 Actual CPU time 68,400