Exercise 11-6 (Algo) Managing a Constrained Resource (L011-6] 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 for constraint in the production process is upholstery labor-hours Information concerning three of Portsmouth's products appears below 12 hours Recliner Love Seat Selling price per unit $ 1,234 5 1.600 51,360 Variable cost per unit 5 1.150 51, Upholstery Labor hours per writ 7 hours 4 hours Required: 1. Portsmouth is considering paying its upholstery laborers hourly compensation, in addition to the usual salaries, to work overtime. Assuming that this extra time would be used to produce sofas, up to how much of an overtime rate 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 541 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 dat 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