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:

Activity	Cost	Activity Base
Production setup	$250,000	Number of setups
Material handling	150,000	Number of parts
General overhead	80,000	Number of direct labor hours

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

	Product A	Product B
Number of setups	100	300
Number of parts	40,000	20,000
Number of direct labor hours	8,000	12,000

What is the activity rate for production setup?

a.$2,500 per setup

b.$625 per setup

c.$833 per setup

d.$400 per setup