! https://newconnect -M Marshal University C,.11? 47, K sneakers. Here. IFL ar05

ID: 2596916 • Letter: #

Question

! https://newconnect -M Marshal University C,.11? 47, K sneakers. Here. IFL ar05.-T 2015-2016 Dodge e- SmartBook Obigtyo 11 mil hapter #12 Homework 4 Portsmouth Company makes fine colonial reproduction furniture. Upholstered furniture is one of its major product lines and the bottleneck on this production line is time in the upholstery shop. Upholstering is a craft that takes years of experience to master and the demand for upholstered furniture far exceeds the company's capacity in the upholstering shop. The company's only variable cost is direct materials. Information concening three of the company's upholistered chairs appears below oints Seat Selling price per unit 8001,250 1,000 6 hours 12 hoars4 hours coat perr Upholatery shop tine required to produce one unit Required: 1. More time could be made available in the upholstery shop by asking the employees who work in this shop to work overtime Assuming that this extra time would be used to produce sofas, up to how much of a premium should the company be willing to pay in terms of an overtime premium per hour to keep the upholstery shop open after normal working hours? 2. A smal nearby upholstering company has offered to upholster furniture for Portsmouth at a fixed charge of $36 per hour. The Print References management of Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can work as quickly jobs such as the Love Seat. How much additional contribution margin per as Portsmouth's own craftsmen on the simpler hour can Portsmouth earn if it provides the raw materials to the nearby company and then hires it to upholster the Love Seats? 3. Should Portsmouth hire the nearby upholstering company? Complete this question by entering your answers in the tabs below Required Required 2 Required 3 A small nearby upholstering company has offered to upholster furniture for Portsmouth at a foxed charge of $36 per hour. The management of Portsmouth is confident that this upholstering company's work is high quality and their craftsmen can work as quickdly as Portsmouth's own craftsmen on the simpler upholstering jobs such as the Love Seat. How much addirional contribution margin per hour can Portsmouth earn if it hires the nearby upholstering company to make Love Seats? Show less Required , Required 3>

Explanation / Answer

REC

SOFA

LOVESEAT

1100

1830

1360

800

1350

1000

CONTRIBUTION

300

480

360

LABOUR HOURS PER UNIT

CONTRIBUTION PER LABOUR HOURS

$300/6

$480/12

$360/4

$50

$40

$90