At Overland Company, maintenance cost is exclusively a variable cost that varies directly with machine-hours. The performance report for July showed that actual maintenance costs totalled $9,800 and that the associated spending variance was $200 unfavourable. If 8,000 machine-hours were actually worked during July, the budgeted maintenance cost per machine-hour was:
a. $1.20.
b. $1.25.
c. $1.275.
d. $1.225.