Penegar, Inc., manufactures and sells two products: Product X7 and Product S4. 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 X7	200	9.0	1,800
Product S4	100	6.0	600
Total direct labor-hours			2,400

The direct labor rate is $21.60 per DLH. The direct materials cost per unit for each product is given below:

	Direct Materials Cost per Unit
Product X7	$128.70
Product S4	$174.10

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

			Expected Activity
Activity Cost Pools	Activity Measures	Estimated Overhead Cost	Product X7	Product S4	Total
Labor-related	DLHs	$78,456	1,800	600	2,400
Machine setups	setups	74,635	600	500	1,100
General factory	MHs	98,091	4,200	3,900	8,100
		$251,182

Which of the following statements concerning the unit product cost of Product X7 is true?

a) The unit product cost of Product X7 under traditional costing is greater than its unit product under activity-based costing by $313.98.

b) The unit product cost of Product X7 under traditional costing is less than its unit product cost under activity-based costing by $313.98.

c) The unit product cost of Product X7 under traditional costing is less than its unit product cost under activity-based costing by $189.87.

d) The unit product cost of Product X7 under traditional costing is greater than its unit product under activity-based costing by $189.87.