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Capacity Utlilisation homework!!!?

the question is "Explain one benefit to the business, with a simple numerical example, of operating at a higher rate of capacity utilisation"

The case study is about a fictional company called Trutime who make watches and are trying to beat Swatch. I don't know what to put, please help!

OK, capacity utilisation is all about how much output a company can produce given it's available equipment and capacity for production. If, for example, it was theoretically possible for Trutime to make 500 watches a day if they fully used their production capacity, but instead only produced 300, then they have not maximised their capacity utilisation. Obviously there are costs to a business in making something - the product variable costs (basically the materials to actually make up the item) and the fixed costs including wages and overheads. If Trutime up their production to 500 watches a day, then the fixed costs are going to be spread over 500 units, not 300, therefore the cost per item is cheaper, and if the extra production does not lead to a drop in demand (therefore the price stays the same), higher profit per item. The other possibility in reducing the cost of production per unit is that if they decide to maintain current profitability levels overall, then they can achieve that selling more items at lower profit (and thus can reduce the cost gicing a potential price advantage over Swatch which should, in turn, help them become market leaders, therefore more in demand, therefore they can start to creep the price up again).
That's the theory, so all you now need to do is pick some numbers for the various elements of materials and fixed overheads, and retail price and show how it works.... by doing this practically, it will help you understand the theory as well...