Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's

[answerhappygod]

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 upholstered chairs
appears below:
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 premium 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 $44 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 if it hires the nearby upholstering
company to make Love Seats?
3. Should Portsmouth hire the nearby upholstering company?