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Recliner So-Fa Love Seat Selling price per' unit $ 1,164 $ 1,966 $ 1,426 Variable cost per' unit $ 896 $ 1,466 $ 1,196 Upholstery
Recliner So-Fa Love Seat Selling price per' unit $ 1,164 $ 1,966 $ 1,426 Variable cost per' unit $ 896 $ 1,466 $ 1,196 Upholstery labor-hour's per unit 7 hours 19 hours 4 hours Required: 1. Portsmouth is considering paying its upholstery laborers hourly compensation, in addition to their usual salaries, to work overtime Assuming that 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 $48 per hour. The management 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 Seat. How much additional contribution margin per hour can Portsmouth earn if it hires the nearby upholstering company to make Love Seats? 3. Should Portsmouth hire the nearby upholstering company
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