Question

Monopoly uses two steps to make a game. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Each worker is paid $15 per hour. Each game is sold for $20. Material costs are $5 per game and fixed costs are $500 per hour. Demand rate is 120 games per hour. How much profit does Monopoly make per hour

Answer 1

Monopoly

The profit that Monopoly makes per hour is:

= $1,876.

Step-by-step explanation:

a) Data and Calculations:

Direct labor costs:

Step 1, 20 seconds at $15 per hour = $5

Step 2, 15 seconds at $15 per hour = $3.75

Total 35 seconds at $15 per hour = $8.75

Direct materials cost $5

Variable cost per game = $13.75

Fixed cost per game = (500 * 35/60) = $292.00

Total cost of production = $305.75

Revenue (120 * $20) = $2,400

Variable cost per hour = 24 ($13.75 * 60/35)

Fixed cost per hour = 500

Total cost per hour = $524

Profit per hour = $1,876