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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

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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 0.8 direct labor hours per unit. The total estimated overhead for next period is $99,735. 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 Factorywith estimated overhead costs and expected activity as follows: Activity Cost Pool Activity 1 Activity 2 General Factory Total Estimated Overhead Costs $30,756 17,670 51,309 $99,735 Expected Activity Basic Deluxe Product Product Total 1,600 900 2,500 1,800 400 2,200 800 1,120 1,920 (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.) Multiple Choice

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