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.Required 1 Required 2Recliner$ 1,128$ 7507 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 $50 per hour. The managementof Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can work as quickly asPortsmouth's own craftsmen on the simpler upholstering jobs such as the Love Seat. How much additional contribution margin perhour can Portsmouth earn if it hires the nearby upholstering company to make Love Seats?3. Should Portsmouth hire the nearby upholstering company?Complete this question by entering your answers in the tabs below.Required 3Sofa$ 1,750$ 1,20010 hoursAdditional contribution margin per hourA small nearby upholstering company has offered to upholster furniture for Portsmouth at a price of $50 per hour. Themanagement of Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can work asquickly as Portsmouth's own craftsmen on the simpler upholstering jobs such as the Love Seat. How much additionalcontribution margin per hour can Portsmouth earn if it hires the nearby upholstering company to make Love Seats?< Required 1Love Seat$1,500$ 1,1005 hoursRequired 3 >Show less 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 unitRecliner$ 1,128$ 750Required 1 Required 27 hoursRequired 3Complete this question by entering your answers in the tabs below.Sofa$ 1,750$ 1,20010 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 $50 per hour. The managementof Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can work as quickly asPortsmouth's own craftsmen on the simpler upholstering jobs such as the Love Seat. How much additional contribution margin perhour can Portsmouth earn if it hires the nearby upholstering company to make Love Seats?3. Should Portsmouth hire the nearby upholstering company?< Required 1Love Seat$ 1,500$ 1,1005 hours.Portsmouth 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 >

A Limiting factor is any factor that is scarce supply and that stops the entity from expanding its…

Portsmouth Company makes upholstered furniture. Its only variable 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: Selling price per unit Variable cost per unit Upholstery labor-hours per unit Recliner $ 1,128 $ 750 7 hours Sofa $ 1,750 $ 1,200 10 hours Love Seat $ 1,500 $ 1,100 5 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 $50 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?

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q