Accounting for scrapHammatt 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$1,162,560Actual operating overhead$1,149,400Budgeted net realizable value of recycled paper$25,760Actual net realizable value of recycled paper$27,160Budgeted billable hours196,000Actual billable hours198,520a. Assuming that number of billable hours is the allocation base, what was the company’s predetermined overhead rate? $Answerb. Record the journal entry for the sale of the recycled paper.AccountDebitCreditAnswerAnswerAnswerAnswerAnswerAnswerTo record sale of by-productc. What was the company’s underapplied or overapplied overhead for the year?Note: Do not use a negative sign with your answer.$Answer Answer

The operating overheads are the indirect costs incurred for operating activities. The forecasting of…

Answered: Hammatt Inc. provides a variety of…

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter18: Activity-based Costing

Section: Chapter Questions

Problem 13E: Handbrain Inc. is considering a change to activity-based product costing. The company produces two...

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Accounting for scrap
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	$1,162,560
Actual operating overhead	$1,149,400
Budgeted net realizable value of recycled paper	$25,760
Actual net realizable value of recycled paper	$27,160
Budgeted billable hours	196,000
Actual billable hours	198,520

a. Assuming that number of billable hours is the allocation base, what was the company’s predetermined overhead rate? $Answer

b. Record the journal entry for the sale of the recycled paper.

Account	Debit	Credit
Answer	Answer	Answer
Answer	Answer	Answer

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.
$Answer Answer

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