The management of Garn Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated activity for the coming year. The Corporation's controller has provided an example to illustrate how this new system would work in this example, the allocation base is machine-hours and the estimated activity for the upcoming year is 43.100 machine hours. Capacity is 61100 machine-hours. All of the manufacturing overhead is foed and is $3,360,500 per year within the range of 43,900 to 61,100 machine-hours . If the Corporation bases its predetermined overhead rate on capacity but the actual level of activity for the year turns out to be 43,500 machine-hours, the cost of unused capacity shown on the income statement prepared for internal management purposes would be closest to: $30,901 $998,901 $968,000 $31,188