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Zzzz Best

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After doing extensive researches us the research team of DooDads Inc. has determined that if we are operating at our most efficient level. The optimal level of widget production to maximize our profit will be to produce 1,763 widgets. We acquired this number by using the information we already have and creating a demand function. The steps we took to create a demand function are the following 1. Using the number of widgets demand and their prices at two intervals and finding the slope.2. Once the slope is found from these two intervals we chose one interval and plug it into the point slope form, giving us our demand function. This allows us to acquire our revenue function, which is the demand function time the number of widgets.3. We create our cost function “price per widget time number of widgets plus fixed cost”.4. Of course (revenue – cost=profit) so now all is left to do is to solve the equation. So, now we have determined from this solving this equation the optimal level of widgets sold is 1,763 however we still need to know the maximum profit. This is determined by plugging optimal level of widgets sold into the profit function; we came out with an optimal profit of $21,170.24. The average cost of each widget (1763plugged into our cost function divided by 1763) is $7.84 per widget. The average revenue per widget (21170.24/1763) is $12.01.Average profit per widget (1,763 plugged into profit function) is $4.17. Since our breakeven point ( where cost = revenue or where they intersect) is at 3,781 widgets I suggest if we produce below this point to start looking into rather or not we should continue producing widgets because we will be operating at a loss instead of making a profit which is what we got in business to do. In the case that a cap is placed on us by EPA because of environmental concerns optimal level of widgets we would be allowed to produce is 1700 which would yield us a maximum profit of $21,150 , an average cost of$ 7.94, average revenue $12.44, and an average profit of $ 4.50. When we our disclosing our financial information to potential investors. I suggest that we also include the calculations with EPA caps on them so that they will have given them a true understanding of what our profit is under any foreseeable conditions.

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