Exercise 11-6 (Static) 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 (or constraint) in the production process is upholstery labor-hours. Information concerning three of Portsmouth's products appears below: Recliner Love Seat Selling price per unit $ 1,400 $ 1,800 $ 1,500 Variable cost per unit $ 800 $ 1,200 $ 1,000 Upholstery labor-hours per unit Sofa 8 hours 10 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 hours? 2. A small nearby upholstering company has offered to upholster furniture for Portsmouth at a price of $45 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 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 Show less Required 2 > Exercise 11-6 (Static) Managing a Constrained Resource (LO11-6] Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's products for exceeds its manufacturing capacity. The bottleneck (or constraints 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 $ 1,400 $ 1,800 $ 1,500 Variable cost per unit 5000 $ 1,200 $1,000 Upholstery Labor-hours per unit 8 hours 10 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 sofos, 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 $45 per hour. The management of Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can works quickly as Portsmouth's own craftsmen on the simpler upholstering jobs such as the love Seat How much additional contribution margin per hour con 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 entering your answers in the tabs below. Required Required 2 Red A small nearby upholtering company has offered to upholster fumiture for Porturowth at a price of $45 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? Show less Audional controllon margin perhout
