Portsmouth Company makes upholstered furniture. Its only varlable 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:

$\backslash$table$[[,$Recliner,Sofa,Love,$],[$Selling price per unit,$$1,296,1,7,720,$$$1,460,],[$Varlable cost per unit,$$860,$$$1,260,$$$950,],[$Upholstery labor$-$hours per unit,$7$ hours,$13$ hours,$6,$hours$]]$

Required:

Portsmouth is considering paying its upholstery laborers hourly compensation, In addition to their usual salarles, to work overtime. Assuming 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 $$37$ per hour. The management of Portsmouth is confident this upholstering company's work Is high quality, and its craftsmen can work as qulckly 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 supplies the direct material and hires the nearby upholstering company to upholster Love Seats?

Should Portsmouth hire the nearby upholstering company?

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Requatad $1$: Required $2|||$ Required $3$

Portsmouth is considering paying its upholstery laborers hourly compensation, in addition to their usual salaries, to work overtime. Assuming 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 nomal working hours?

Maximum overtime rate per hour