The management of Winterroth Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. 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. 
If the Corporation bases its predetermined overhead rate on capacity, then as shown on the income statement prepared for internal management purposes, the cost of unused capacity would be closest to:
Definitions:
Register
A memory word or area for the temporary storage of data used within mathematical, logical, or transfer functions.
Sequencer Instruction
Commands or operations that control the order of execution of actions in a sequence within a control system.
Energized
A state in which an electrical component or circuit has power supplied to it, allowing it to perform its intended function.
Shift Register
A type of digital memory circuit used to store and shift its content on a signal, used for serial-to-parallel and parallel-to-serial conversion.
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