LocalFabric produces tow products: wool and cotton. Company uses direct labor hours to allocate overhead cost to its products. The company decided to experiment with activity-based costing system and has created two activity cost pools and related activity cost drivers. These two cost pools are Cutting (cost driver is machine hours) and Design (cost driver is number of setups). Additional information is provided below: Wool Cotton Total Overhead cost per year Machine hours 500 625 1,125 Cutting 20,000 Number of setups 2,550 2,295 4,845 Design 24,000 Direct labor hours 4,000 5,400 9,400 Total 44,000

1) Determine the amount of overhead allocated to each product using traditional costing system and direct labor hours as allocation base