6 Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's products far exceeds its manufacturing capacity. The bottleneck (or constraint) in the production process is upholstery labor- hours. Information concerning three of Portsmouth's upholstered chairs appears below: 2.14 points eBook Selling price per unit Variable cost per unit Upholstery labor-hours per unit Love Recliner Sofa Seat $ 1,340 $1,930 $1,350 $ 800 $1,300 $ 900 10 14 5 hours hours hours Hint Print Required: 1. Portsmouth is considering paying its upholstery laborers hourly compensation, in addition to their usual salaries, to work overtime. Assuming that this extra time would be Reference used to produce sofas, up to how much of an overtime premium per hour should the company be willing to pay to keep the upholstery shop open after normal working hours? 2. A small nearby upholstering company has offered to upholster furniture for Portsmouth at a price of $40 per hour. The management of Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can work as quickly as Portsmouth's own craftsmen on the simpler upholstering jobs such as the Love Seat How much additional contribution margin per hour can Portsmouth eam if it hires the nearby upholstering company to make Love Seats? 3. Should Portsmouth hire the nearby upholstering company? Complete this question by entering your answers in the tabs below. 6 2.14 points 2. A small nearby upholstering company has offered to upholster furniture for Portsmouth at a price of $40 per hour. The management of Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can work as quickly as Portsmouth's own craftsmen on the simpler upholstering jobs such as the Love Seat. How much additional contribution margin per hour can Portsmouth earn if it hires the nearby upholstering company to make Love Seats? 3. Should Portsmouth hire the nearby upholstering company? eBook Complete this question by entering your answers in the tabs below. Hint Requi... Requi... Requi... Print 3 D Reference A small nearby upholstering company has offered to upholster furniture for Portsmouth at a fixed charge of $40 per hour. The management of Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can work as quickly as Portsmouth's own craftsmen on the simpler upholstering jobs such as the Love Seat. How much additional contribution margin per hour can Portsmouth earn if it hires the nearby upholstering company to make Love Seats? Show less Additional contribution margin per hour K Required 1 Required 3 > 6 14 points addition to their usual salaries to work overtime Assuming that this extra time would be used to produce sofas, up to how much of an overtime premium per hour should the company be willing to pay to keep the upholstery shop open after normal working hours? 2. A small nearby upholstering company has offered to upholster furniture for Portsmouth at a price of $40 per hour. The management of Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can work as quickly as Portsmouth's own craftsmen on the simpler upholstering jobs such as the Love Seat. How much additional contribution margin per hour can Portsmouth earn if it hires the nearby upholstering company to make Love Seats? 3. Should Portsmouth hire the nearby upholstering company? eBook Hint Complete this question by entering your answers in the tabs below. Print Requi... Requi... Requi... Reference Should Portsmouth hire the nearby upholstering company? Yes NO
