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Markham Company makes two products: Basic Product and Deluxe Product Annual production and sales are 2,000 units of Basic Product and 1,400 units of

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Markham Company makes two products: Basic Product and Deluxe Product Annual production and sales are 2,000 units of Basic Product and 1,400 units of Deluxe Product. The company has traditionally used direct labor hours as the basis for applying all manufacturing overhead to products. Basic Product requires 0.4 direct labor hours per unit and Deluxe Product requires OB direct labor hours per unit. The total estimated overhead for next period is $99,285 The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools-Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows: Activity Cost Pool Estimated Expected Activity Overhead Basic Deluxe Costs Product Product Total Activity 1 $30,648 1,400 700 2,100 Activity 2 17,535 2,000 300 2,300 General Factory Total 51,102 800 1,120 1,920 599,285 (Note: The General Factory costs are allocated on the basis of direct labor hours) The overhead cost per unit of Deluxe Product under the activity-based costing system is closest to: (Round your intermediate values to 2 decimal places.) Mine Choc 54317 $2129 4

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