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Portsmouth Company makes fine colonial reproduction furniture. Upholstered furniture is one of its major product lines and the bottleneck on this production line is time
Portsmouth Company makes fine colonial reproduction furniture. Upholstered furniture is one of its major product lines and the bottleneck on this production line is time in the upholstery shop. Upholstering is a craft that takes years of experience to master and the demand for upholstered fumiture far exceeds the company's capacty in the upholstering conceming three of the company's upholstered chairs appears below shop, Information ppears Seling price per unit Variable cost per uni Upholstory shop time roquirod to produce one unit ReclinerSofa Love Seat 51,372 $1,845 1.450 51,350 5 houns SB50 S1,350 $1.000 hours 11 hours hours Required: ssuming that te extra time would bused to produce so as u to how much should the company be willing to pay per hour to 1. More time could be made availabe n the upholstery shop by asking the employees who work in this shop to work o e me keep the upholstery shop open after normal working hours? 2. A small nearby upholstering company has offered to upholster furniture for Portsmouth at a fixed charge of $41 per hour. The management of Portsmouth is confident that this upholstering company's work is high quality and their craftsmen should be able to work about as quickly as Portsmouth's own craftsmen on the simpler upholstering jobs such as the love seat. Should management accept this offer? O Yes O No
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