Miramar Industries manufactures two products: A and B. The manufacturing operation involves three overhead activitiesproduction setup, material handling, and general factory activities. Miramar uses activity-based costing to allocate overhead to products. An activity analysis of the overhead revealed the following estimated costs and activity bases for these activities:

ActivityCostActivity BaseProduction setup$250,000Number of setupsMaterial handling150,000Number of partsGeneral overhead80,000Number of direct labor hours

Each product's total activity in each of the three areas are as follows:

Product AProduct BNumber of setups100300Number of parts40,00020,000Number of direct labor hours8,00012,000

What is the activity rate for production setup?

a. $833 per setup

b. $400 per setup

c. $625 per setup

d. $2,500 per setup