Hammatt Inc. provides a variety of services for commercial clients. Hammatt destroys any paper client records after seven years and the shredded paper is sold to a recycling company. The net realizable value of the recycled paper is treated as a reduction to operating overhead. The following data pertain to operations for the year: Budgeted operating overhead $1,245,600 Actual operating overhead $1,231,500 Budgeted net realizable value of recycled paper Actual net realizable value of recycled paper $27,600 $29,100 Budgeted billable hours 210,000 Actual billable hours 212,700 a. Assuming that number of billable hours is the allocation base, what was the company's predetermined overhead rate? $ 0 b. Record the journal entry for the sale of the recycled paper. Account Debit Credit 2$ 0 $ To record sale of by-product c. What was the company's underapplied or overapplied overhead for the year? Note: Do not use a negative sign with your answer. $ 0

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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I have a cost accounting question.

**Hammatt Inc. Operations Overview**

**Operational Data for the Year:**

- **Budgeted operating overhead:** $1,245,600
- **Actual operating overhead:** $1,231,500
- **Budgeted net realizable value of recycled paper:** $27,600
- **Actual net realizable value of recycled paper:** $29,100
- **Budgeted billable hours:** 210,000
- **Actual billable hours:** 212,700

**Tasks:**

a. **Predetermined Overhead Rate Calculation:**

   Assuming the number of billable hours as the allocation base, compute the predetermined overhead rate.

b. **Journal Entry for Recycled Paper Sale:**

   Record the sale of the recycled paper in the journal.

   | Account | Debit | Credit |
   |---------|-------|--------|
   |         | $0    | $0     |
   |         | $0    | $0     |

   *To record sale of by-product*

c. **Overhead Application Analysis:**

   Determine the company's underapplied or overapplied overhead for the year.

   **Note:** Do not use a negative sign with your answer.

   $______
Transcribed Image Text:**Hammatt Inc. Operations Overview** **Operational Data for the Year:** - **Budgeted operating overhead:** $1,245,600 - **Actual operating overhead:** $1,231,500 - **Budgeted net realizable value of recycled paper:** $27,600 - **Actual net realizable value of recycled paper:** $29,100 - **Budgeted billable hours:** 210,000 - **Actual billable hours:** 212,700 **Tasks:** a. **Predetermined Overhead Rate Calculation:** Assuming the number of billable hours as the allocation base, compute the predetermined overhead rate. b. **Journal Entry for Recycled Paper Sale:** Record the sale of the recycled paper in the journal. | Account | Debit | Credit | |---------|-------|--------| | | $0 | $0 | | | $0 | $0 | *To record sale of by-product* c. **Overhead Application Analysis:** Determine the company's underapplied or overapplied overhead for the year. **Note:** Do not use a negative sign with your answer. $______
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