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

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

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).&nbspHowto start a home-based car detailing business.Guilford, CT: Globe Pequot Press.