Answer:
The predetermined overhead rate is a. $6 per direct labor hour
Explanation:
Overheads are included in the Product cost at Budgeted Rate multiplied by Actual Activity. This is normally known as application of Manufacturing Overhead.
Budgeted Rate is also known as Predetermined Overheads rate and is calculated as follows:
<em>Total Budgeted Overhead Cost / Total Budgeted Activity</em>
Note that Jones Company applies overhead based on direct labor hours. Thus the Budgeted Activity is Estimated direct labor hours
Thus Predetermined Overheads rate = $480,000/ 80,000
= $ 6 per direct labor hour