Step 1: Understanding the relationship.
The magnifying power \( M \) of a simple microscope is given by:
\[
M = 1 + \frac{D}{f}
\]
where \( D \) is the distance of distinct vision, and \( f \) is the focal length of the lens. The magnifying power is maximum when the image is formed at the distance of distinct vision \( D \).
Step 2: Conclusion.
Thus, the magnifying power is maximum when the image is formed at DDV, corresponding to option (B).