Markham Company makes two products: Basic Product and Deluxe Product. Annual production and sales are 1,900 units of Basic Product and 1,500 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 $99,635. 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 Activity 1 Activity 2 General Factory Total Estimated Overhead Costs Expected Activity Basic Product Deluxe Product Total $ 30,732 1,400 700 2,100 17,640 2,000 300 2,300 51,263 760 1,200 1,960 $ 99,635 (Note: The General Factory costs are allocated on the basis of direct labor-hours.) The predetermined overhead rate (i.e., activity rate) for Activity 2 under the activity-based costing system is closest to: