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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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