(Accounting for by-products) Providence 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 op¬ erating overhead. Data pertaining to operations for 1997 follow:

a. What was the company’s estimated predetermined overhead rate?

b. What journal entry should the company make to record the sale of the re¬ cycled paper?

c. What was the company’s underapplied or overapplied overhead tor 1997?LO1

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Estimated operating overhead Estimated CPU time (hours) Estimated net realizable value of recycled paper During 1997, the following actual data were recorded: Operating overhead Actual CPU time. Net realizable value of recycled paper $400,500 35,000 $ 20,400 $399,500 34,200 $ 21,500