Masiclat, Inc., manufactures and sells two products: Product K2 and Product O8. 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 K2	500	9.0	4,500
Product O8	700	12.0	8,400
Total direct labor-hours			12,900

The direct labor rate is $21.10 per DLH. The direct materials cost per unit for each product is given below:

	Direct Materials Cost per Unit
Product K2	$201.30
Product O8	$298.90

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 K2	Product O8	Total
Labor-related	DLHs	$426,861	4,500	8,400	12,900
Machine setups	setups	59,328	400	500	900
General factory	MHs	442,085	4,300	4,200	8,500
		$928,274

The unit product cost of Product K2 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:

$1,038.84 per unit

$689.01 per unit

$859.29 per unit

$984.48 per unit