Subject name: Accounting & Finance Decision-Making Mangers

The below problem is a Differential Analysis problem, including *****Constraint type problem*** Please utilize differential analysis to solve the problems. Please show all work and responses in the answer with an explanation on each Excel worksheet

Question:

Majors Design crafts fine upholstered furniture. The bottleneck in the production of Majors furniture is the time in the upholstery shop. Data regarding three of the companys top selling chairs appears below:

				Wingback Armchair		Leather Office Chair		Savanah Armchair
Selling price per unit				$ 1,100		$ 1,700		$ 1,200
Variable cost per unit				$ 700		$ 1,100		$ 900
Upholstery shop time				7	hrs	10	hrs	4	hrs
required to produce one unit

1. One strategy to make more time available in the upholster shop is to ask the employees who work in the upholstery shop to work overtime. If the extra time is used to produce the Leather Office Chairs, up to how much should the company be willing to pay per hour to keep the upholstery shop open after normal working hours? Show all computations.

2. A small, reputable company has offered to upholster furniture for Majors Design at a fixed charge of $50 per hour. Majors Design is confident that this companys workmanship is of high quality and the speed would be comparable to their own on more simple jobs such as the Savanah Armchair. Should management accept this offer? Explain. Show computations to support your answer.