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Portsmouth Company makes upholstered fumiture lis only variable cosi is diect materials. The demand for the comipanys products far exceeds its manulacturing capacty. The bottlenieck
Portsmouth Company makes upholstered fumiture lis only variable cosi is diect materials. The demand for the comipanys products far exceeds its manulacturing capacty. The bottlenieck (or constraint) in the production procens is upholstery labor tiours. Infommation conceming thee of Portsmovth products oppears below: Required: 1. Portsmouth is considering paying its upholstery laborers houtly compensation. in addition to their usual salanies, to work overtime. Assuming that this extro time would be used to produce sofos, up to how much of on overtime rote per hour should the company be Willing to pay to keep the upholstery shop open ofter normal working hours? 2 A small nearby upholstering company has offered to upholster furniture for Portsmouth ot a price of $55 per hour The manogement of Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can work as quickiy 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 mako Love Seats? 3. Should Portsmouth hire the nearby upholstering company? Complete this question by entering your answers in the tabs below. Portsmouth is consldering paying its upholstery laborers hourly compensotion, in addition to their usual salaries, to work overtime. Assuming that thils extra time would be used to produce sofas, up to how much of an cvertime rate per hour should the company be willing to pay to keep the upholstery shop open after normal working hours
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