34. (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?