Exercise 11-6 (Algo) Managing a Constrained Resource (LO11-6) pe HA Portsmouth Company makes upholstered furniture Its only variable cost is direct materials. The demand for the company's products fat exceeds its manufacturing capacity. The bottleneck (or constraint in the production process is upholstery labor hours Information concerning three of Portsmouth's products appears below Recliner Sofa Love Seat Selling price per unit 31,311 51.000 31,225 Varble cost per wit 3150 3 1.350 $150 Upholstery labor hours per unit hour 11 hours 5 hours 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 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 houds 2. A small nearby upholstering company has offered to upholster furniture for Portmouth at a price of 547 per hour The management of Portsmouth is confident that this upholsterng company's work is high quality and their craftsmen can work as quickly as Portsmouth's own craftsmen on the simpler upholstening jobs such as the Love Seat How much additional contribution maron per hour can Portsmouth can fit hires the nearby upholsteine company to make love Seats? 3. Should Portsmouth Hire the nearby upholstering company Complete this question by entering your answers in the tabs below. Che Ponsmouths own craftsmen on me simpier upnoistening jobs such as the love Seat How much agamonal contouton 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 tobs below. Required 1 Required 2 Required 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 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? Maximum overtime rate per hour Required 2 > Portsmouths own crartsmen on the simpler upnoistening jobs sucn as the Love Seat How mucn acantional contribution margin 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. Required 1 Required 2 Required 3 A small nearby upholstering company has offered to upholster furniture for Portsmouth at a price of $47 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 rices Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Should Portsmouth hire the nearby upholstering company? Ores ONO int ences
