At the beginning of the current year, Garber Corporation estimated that its manufacturing overhead…

At the beginning of the current year, Garber Corporation estimated that its manufacturing overhead would be $70,000 and the activity level would be 10,000 machine-hours. The level of activity at capacity is 14,000 machine-hours. The actual manufacturing overhead for the year was $63,300 and the actual level of activity was 10,100 machine-hours. If the company bases its predetermined overhead rate on machine-hours at capacity, then the cost of unused capacity reported on the income statement would have been:

A) $700

B) $7,400

C) $6,700

D) $12,800

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