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	1,000	5	5,000
Product W7	410	3	1,230
Total direct labor-hours			6,230

The direct labor rate is $20.60 per DLH. The direct materials cost per unit is $145.50 for Product X0 and $127 for Product W7.

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

		Estimated		Expected Activity
Activity Cost Pools	Activity Measures	Overhead Cost		Product X0	Product W7	Total
Labor-related	DLHs	$	273,078	5,000	1,230	6,230
Production orders	orders		19,048	510	710	1,220
Order size	MHs		241,674	4,010	4,110	8,120
		$	533,800

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 cost under activity-based costing by $199.81.

The unit product cost of Product W7 under traditional costing is less than its unit product cost under activity-based costing by $37.72.

The unit product cost of Product W7 under traditional costing is greater than its unit product cost under activity-based costing by $37.72.

The unit product cost of Product W7 under traditional costing is less than its unit product cost under activity-based costing by $199.81.