Exercise 11.6 (Algo) Managing a Constrained Resource [LO11-6] Portsmouth Compony mokes uphotstered fumiture, its only variable cost is direct materiais. The demand for the company's products far exceeds its manufacturing capacily. The bottleneck (or constraint in the production process is upholstery labor hours. Information concerning three of Portsmouth's products appears below Required: 1. Portsmouth is considering paying its upholstery laborers hourly compensation, in addition to their usual solaries, to work overtime. Assuming thot this extra time would be used to produce sofas, up to how much of an overtime rate per hour should the campary be willing to pay to keep the upholstery shop open after normal working hours? 2. A small nearby uphoistering compary has offered to upholster furniture for Portsmouth at a price of $39 per houe. The manogement of Portsmouth is confident that this upholstering company's work is high quolity and their cratsmen can work as quickly as. Portsmouth's own craftsmen on the simpler uphoistering jobs such as the Lowe Seat. How much addional 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? Complete this question by eaterity your answers in the tabs below. Portsmouth is considering paying its upholatery faborers hourly compensation, in addition to thesr usual salaries, to werk overtime. Assuming that this extra time would be used to produce sofas, up to how much of an overtime rate per bour should the company be willing to pay to keep the upholstery shop open after normal working hours? Exercise 11-6 (Algo) Managing a Constrained Resource [LO11-6] Portsmouth Compary mokes upholstered furniture. Its only variobie cost is direct materials. The demand for the company's products far exceeds its marufacturing capsoty. The bottleneck (or constraint) in the production process is upholstery labor-hours. Information concetning three of Portsmouth's products appears bolow: Required: 1. Portsmouth is considering paying its upholstery laborers hourly compensation, in addatian 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 compary 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 $39 per hour. The monagement of Portsmouth is confident that this upholstering company's work is high qually ond their craftsmen can work as quickly as Portsmouth's own craftsmen on the simpler uphoistering jobs such as the Love Seat. How much additional contribution margin per hour can Portsmouth earn if it hires the nearby upholstering company to meke Love Seats? 3 Should Portsmouth hire the nearby uphoistering company? Complete this question by entering your answers in the tabs below. A small nearby upholstering company has offered to upholster furniture for Portsmouth at a price of $39 per hour. The management of Portsmouth is confident that this upholstering company's work is high cuality and their craftsmen can work as quickly as Portsmouth's own craftsmen on the simpler upholstering jobs such as the Lowe Seat. How much additional contribution margin per hour can Portsmouth earn if it hires the nearby upholstering company to make Love Soats
