The management of Garn Corporation would like to investigate the possibility of basing it predetermined overhead on activity at capacity rather than on the estimated activity for the coming year. The corporations 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 46,300 machine hours. Capacity is 66,300 machine hours. All of the manufacturing overhead is fixed and is 3,911,700 per year within the range of 46,300 to 66,300 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 47,100 machine hours, the cost of unused capacity shown on the income statement prepared for internal management purposes would be closest to: ???

A - 66,441$

B - 1,199,241

C -1,132,800

D - 67,589

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