Recek, Inc., manufactures and sells two products: Product Y5 and Product N7. 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 Y5	1,000	6.0	6,000
Product N7	400	8.0	3,200
Total direct labor-hours			9,200

The direct labor rate is $22.90 per DLH. The direct materials cost per unit for each product is given below:

	Direct Materials Cost per Unit
Product Y5	$252.90
Product N7	$202.00

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 Y5	Product N7	Total
Labor-related	DLHs	$321,724	6,000	3,200	9,200
Machine setups	setups	67,221	400	500	900
General factory	MHs	905,262	4,800	4,500	9,300
		$1,294,207

Which of the following statements concerning the unit product cost of Product N7 is true?

The unit product cost of Product N7 under traditional costing is less than its unit product cost under activity-based costing by $342.84.

The unit product cost of Product N7 under traditional costing is greater than its unit product under activity-based costing by $761.27.

The unit product cost of Product N7 under traditional costing is greater than its unit product under activity-based costing by $342.84.

The unit product cost of Product N7 under traditional costing is less than its unit product cost under activity-based costing by $761.27.