Autofresh Solutions
AutofreshSolutions
AutofreshSolutions
Myplan is to venture into the cleaning services industry through themanufacture of cleaning agents. My niche market will be the carcleaning industry because of my interest in cars. The company’sname will be Autofresh solutions. My primary product will be a liquidsoap agent. The firm will focus more on sales and marketing since theproduction process is simple(Doyle, 2012).But in the future, the company will diversify to offer all interiorand exterior cleaning solutions for vehicles.
Inputs
Capital
Debt= $5000
Thiscapital will be raised through a convertible note that will matureinto shares in .
Labour
Production-2 employees @$10/hr
Packaging-2 employees @$8/hr
Branding-1 employee @$8/hr
Sales-3 employees @ $9/hr
Marketing-2 [email protected]$9/hr
10Employee’s Total $44/hr
Materials:1 unit (20 Liters)
Nitrosol:125g $0.8
Sulphonicacid: 1 ltr $2.80
Causticsoda: 500g $0.3
Sodaash: 500g $0.3
Texapon:100g $0.185
Formalin:100g $0.185
Sodiumlaurate sulphate (S.L.S):100g $0.50
Sodiumtripolyphosphate (S.T.T.P):100g $0.10
Colorant: $0.15
Water(19ltrs) 0
$5.30
Output
1unit = 20ltr cleaning product / hr
2.Short run production
Capital |
Labour |
TPl (Q) |
APl=Q/L |
MPl=▲Q/▲L |
5000 |
2 |
160 |
80 |
– |
5000 |
4 |
400 |
100 |
120 |
5000 |
6 |
600 |
100 |
100 |
5000 |
8 |
720 |
90 |
60 |
T
P-L LABOUR
otal product curve
OUTPUT
LABOUR
LABOUR
Thegraph shows that successive increase in labor results in a less thanproportional increase in output units over time.
Total,Average and Marginal Production of Labour
-
Labour
TPL (Quantity)
APL = Q / L
MPL = ▲Q / ▲L
0
0
0
0
2
160
80
80
4
400
100
120
6
600
100
100
Averageproduct of labor
APL / MPL
LABOUR
Whenthere is low productivity, the average product of labor tends toincrease as labor is added.
Marginalproduct of labor
MPL
. LABOUR
Asthe units of labor are added it reaches a point, the resultingadditions to the output begin to decrease.
3.Short-run costs
FixedCosts: Rent$150
Interest $100
Salaries $7000
TotalFixed Costs $7250
VariableCosts: Electricity$75
Materials $800
TotalVariable Costs $875
AverageCosts:
Av.Fixed Costs = Fixed Costs / Quantity = 250 / 160 = $45.30
Av.Variable Costs = Variable Costs / Quantity = 875 / 160 = $5.50
MarginalCosts = ▲Total Costs / ▲Quantity = $5.50
TotalCosts = Fixed Costs + Variable Costs = 7250 + 875 = $8125
Output(Q) |
TFC |
TVC |
TC=TFC+TVC |
AFC=TFC/Q |
AVC=TVC/Q |
AC=AFC+AVC |
0 |
7250 |
0 |
7250 |
0 |
0 |
0 |
160 |
7250 |
875 |
8125 |
45 |
5.5 |
50.5 |
200 |
7250 |
1000 |
8250 |
36 |
5 |
41.5 |
240 |
7250 |
1250 |
8500 |
30 |
5.2 |
35.2 |
TotalCost Curve
TC
Costs
TVC
TFC
Output
Asthe output increases over time, the total variable costs begin tofall, and the total costs follow almost the same pattern
Average/ Marginal Costs
MC
ATC
Costs
AVC
D
Quantity
Theintersection between demand, average variable cost and marginal costrepresents the profit maximization point.
4.Profit Maximizing Price
TotalRevenue = 160units * $65
Profit= Total Revenue-Total Costs = $10,400 – $8125
=$2275
References
Doyle,R. (2012). Howto start a home-based car detailing business.Guilford, CT: Globe Pequot Press.
No related posts.