How many additional watches can be produced

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Reference no: EM1320146

Q. An industry produces digital watches on a single production line serviced during one daily shift. The total output of watches depends directly on the number of labor-hours employed on the line. Maximum capacity of the line is 120,000 watches every month; this output requires 60,000 hours of labor every month. Total fixed costs come to $600,000 every month, the wage rate averages $8 every hour; also other variable cost (e.g., materials) average $6 every watch. The marketing department's estimate of demand is P=28-Q / 20,000, where P denotes price in dollars also Q is monthly demand.

Elucidate how many additional watches can be produced by an extra hour of labor? Illustrate what is the marginal cost of an additional watch? As a profit maximize, Illustrate what price also output should the industry set? Is production capacity fully utilized? Illustrate what contribution does this product line provide?

Reference no: EM1320146

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