EXERCISE 12-6 Managing a Constrained Resource LO12-6 Portsmouth Company makes fine colonial reproduction furniture. Upholstered furn its major product lines and the bottleneck on this production line is time in the Upholstering is a craft that takes years of experience to master and the demand for niture far exceeds the company's capacity in the upholstering shop. Information of the company's upholstered chairs appears below: furniture is one of or uphol stered concerning thrce Recliner Sofa Love Seat $1,400 $1,800 $1,500 $800 $1,200 $%1,000 Upholstery shop time required to produce one unit.. .8 hours 10 hours 5 hours Variable cost per unit . . . .. . . . . . . .. m cod be made available in the upholstery shop by asking the employees who work be l. More time t. in this shop to work overtime. Assuming that this extra time would be used to produce sofas, up to how much of a premium should the company be willing to pay in terms of an overtime premium per hour to keep the upholstery shop open after normal working hours? small nearby upholstering company has offered to upholster furniture for Portsmouth at a fixed charge of $45 per hour. The management of Portsmouth is confident that this upholstering company's A on the contribution margin per simpler upholstering jobs such as the Love Seat. How much additional ur can Portsmouth earn if it hires the nearby upholstering company to make Love Seats? . Should Portsmouth hire the nearby upholstering company? Explain