Adams Company has two products: A and B. The annual production and sales of Product A is 2,600 units and of Product B is 2,000 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labor-hours per unit and Product B requires 0.6 direct labor-hours per unit. The total estimated overhead for next period is $108,775.

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:

ActivitiesEstimated Overhead

cost

Expected ActivityProduct AProduct BTotalActivity 1$33,6111,9001,5003,400Activity 219,1442,6001,1003,700General Factory56,020

7801,2001,980Total$108,775

(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor-hours.)

The predetermined overhead rate under the traditional costing system is closest to:

$5.17

$28.29

$54.94

$9.89

Please show how you got the response Please.