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Portsmouth Company makes upholstered furniture, Its only variable cost is direct materials. The demand for the company's products far exceeds its manufocturing copacity. The botteneck

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Portsmouth Company makes upholstered furniture, Its only variable cost is direct materials. The demand for the company's products far exceeds its manufocturing copacity. The botteneck (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 salarles, to work overtime. Assuming that this extra time would be used to produce sofas, up to how much of on overtime rote per hour should the company be wiling to pay to keep the upholstery shop open after normbl working hours? 2. A small nearby upholstering compony has offered to upholster fumiture for Portsmouth at o price of $48 per houe. The manogement 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 Seot. How much additional contribution margin per hour can Portsmouth earn if it hires the nearby uphoistering company to make Love Seats? 3. Should Portsmouth hire the nearby uphoistering company? Portsmouth is considering poying its upholstery laborers hourly compensation, in addition to their usual salaries, to work overtime. Assuming that this extro time would be used to produce sofas, up to how much of an overtime rote per hour should the company be wiling to pay to keep the upholstery shop open after normel working hours? A small nearby upholstering company has offered to upholster fumiture for Portsmouth at a price of $48 per hour. The management of Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can work as quidky as Portsmouth's own craftsmen on the simpler upholstering jobs such as the Love Seat, How much additional contribution marqin per hour can Portsmouth earn if it hires the nearby upholstering company to make Love Seats

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