Variable element in the predetermined overhead rate

Question

Problem: Bakos Corporation's abbreviated flexible budget for two levels of activity appears below:

                                          Cost Formula             Activity
                                      (per machine-hour)  (in machine-hours)

                                                                       2,900        3,000
Total variable overhead cost      $8.7                $25,230    $26,100
Total fixed overhead cost                                102,100    102,100
Total overhead cost                                      $127,330    $128,200

If the denominator level of activity is 2,900 machine-hours, the variable element in the predetermined overhead rate would be:

• $9.9
• $7.9
• $9.4
• $8.7