Business, 24.10.2019 02:00 ajl05

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 constriant) in the production process is upholstery labor-hours. information concerning three of portsmouth's upholstered chairs appears below:

recliner sofa love seat
selling price per unit $ 1,400 $ 1,800 $ 1,500
variable cost per unit $ 800 $ 1,200 $ 1,000
upholstery labor-hours per unit 8 hours 10 hours 5 hours
required:

1. portsmouth is considering paying its upholstery laborers additional compensation 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?

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Portsmouth company makes upholstered furniture. its only variable cost is direct materials. the dema...

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