Emerald Corporation's overhead budget for 2013 was as follows: Factory supervision $450,000 Utilities costs 250,000 Insurance 30,000 Property taxes 25,000 Depreciation 125,000 Total $880,000 750,000 units were produced in 2013. Direct labor cost is $42,000,000. For both 2013 and 2014, each unit required 4 direct labor hours at $14 per hour. In 2014, property taxes, insurance, and depreciation are
expected to stay at 2013 levels. Utilities costs vary proportionally with units produced. Factory supervision increases by increments of $45,000 for every 300,000 increase in direct labor hours. The 2014 expected production is 1,200,000 units. What will be the value for factory supervision of Emerald in the 2014 overhead budget?
A) $720,000
B) $270,000
C) $450,000
D) $990,000
A
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