Faz, Incorporated, manufactures and sells two products: Product X0 and Product W7. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:

	Expected Production	Direct Labor-Hours Per Unit	Total Direct Labor-Hours
Product X0	1,500	5	7,500
Product W7	560	2	1,120
Total direct labor-hours			8,620

The direct labor rate is $35.60 per DLH. The direct materials cost per unit is $160.50 for Product X0 and $142 for Product W7.

The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

Activity Cost Pools	Activity Measures	Estimated Overhead Cost	Expected Activity
			Product X0	Product W7	Total
Labor-related	DLHs	$ 288,078	7,500	1,120	8,620
Production orders	orders	20,548	660	860	1,520
Order size	MHs	251,894	4,160	4,260	8,420
		$ 560,520

Which of the following statements concerning the unit product cost of Product W7 is true? (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• The unit product cost of Product W7 under traditional costing is greater than its unit product under activity-based costing by $82.17.

• The unit product cost of Product W7 under traditional costing is greater than its unit product under activity-based costing by $185.15.

• The unit product cost of Product W7 under traditional costing is less than its unit product cost under activity-based costing by $185.15.

• The unit product cost of Product W7 under traditional costing is less than its unit product cost under activity-based costing by $82.17.