Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information:

Activity	Cost Driver	Amount			M		XY
Production setups	Number of setups	$	84,000		20		30
Material handling	Number of parts		47,000		45		30
Packaging costs	Number of units		306,500		105,000		70,000
		$	437,500

What is the total overhead per unit allocated to Product M using activity-based costing (ABC)?

$1.87.

$2.74.

$2.50.

$2.34.

Please show all work.