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Simmerman Company manufactures two products, Product A and Product B. The company's overhead costs consist of setting up machines, $600,000; machining, $300,000; and inspecting, $900,000.

Simmerman Company manufactures two products, Product A and Product B. The company's overhead costs consist of setting up machines, $600,000; machining, $300,000; and inspecting, $900,000. Information on the two products is:

Product A

Product B

Total

Direct labor hours

30,000

10,000

40,000

Machine setups

750

250

1,000

Machine hours

37,500

12,500

50,000

Inspections

1,125

375

1,500

Calculate the amount of overhead applied to Product A using traditional costing based on direct labor hours.

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