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Exercise 12-6 Managing a Constrained Resource (L012-6] Portsmouth Company makes upholstered furniture. Its only variable costComplete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Portsmouth is consideringComplete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 A small nearby upholsteri

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Answer #1
1
Sofas
Selling price per unit 1700
Less: Variable cost per unit 1200
Contribution margin per unit 500
Upholstery shop time required to produce one unit 10
Contribution margin per unit of the constrained resource 50
Maximum overtime premium per hour = 50
2
Love seat
Selling price per unit 1520
Less: Variable cost per unit 1100
Contribution margin per unit 420
Upholstery shop time required to produce one unit 6
Contribution margin per unit of the constrained resource 70
Less: Additional cost per hour 47
Additional Contribution margin per hour 23
3
Yes, hire the nearby upholstering company
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