Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's productsfar exceeds its manufacturing capacity. The bottleneck (or constraint) in the production process is upholstery labor-hours. Informationconcerning three of Portsmouth's products appears below:Selling price per unitVariable cost per unitUpholstery labor-hours per unit.ReclinerRequired 1 Required 2$ 1,304$ 800Required 39 hoursRequired: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 bewilling 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 $47 per hour. The managementof Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can work as quickly asPortsmouth's own craftsmen on the simpler upholstering jobs such as the Love Seat. How much additional contribution margin perhour can Portsmouth earn if it hires the nearby upholstering company to make Love Seats?3. Should Portsmouth hire the nearby upholstering company?Complete this question by entering your answers in the tabs below.Sofa$ 1,950$ 1,30013 hours< Required 1Love Seat$ 1,450$1,0505 hoursPortsmouth is considering paying its upholstery laborers hourly compensation, in addition to their usual salaries, to workovertime. Assuming that this extra time would be used to produce sofas, up to how much of an overtime rate per hour shouldthe company be willing to pay to keep the upholstery shop open after normal working hours?Maximum overtime rate per hourRequired 2 >

1. CVP analysis is used to identify the changes in costs and volume that affect a company's operating income.2. CVP analysis plays a vital role in decision-making.3. It is used to find out the number of units required to sell to gain a profit or break-even point.1)ParicularsSofasSales price per unit$1,950Less: Variable cost per unit($1,300)Contribution margin per unit$650Upholstery labor-hours per unit13 hoursMaximum overtime premium per hour$50Note:- ($650/13)=$502)ParticularsLove SeatSales price per unit$1,450Less: Variable cost per unit($1,050)Contribution margin per unit$400Upholstery labor-hours per unit5 hoursContribution margin per hour$80Less: Purchase price($47)Additional contribution margin per hour$33Note:- ($400/5) =$803)Yes, Portsmouth should hire the nearby upholstering company. As by hiring the upholstering company the Portsmouth is earning profit.Conclusion:- All requirements are prepared as pwr the given data.