Arrange the following steps to illustrate the process of determining the optimal production level using marginal costs: A) Analyze how variable costs affect marginal costs; B) Calculate the marginal cost of producing one more unit; C) Compare marginal costs with marginal revenue; D) Adjust production levels based on profit maximization.

To determine the optimal production level using marginal costs, you first need to calculate the marginal cost of producing one more unit, which is step B. Once you have this information, you can analyze how variable costs affect marginal costs in step A, as variable costs directly influence the cost of producing additional units. After understanding these costs, you compare the marginal costs to the marginal revenue in step C to see if producing more units will increase profit. Finally, in step D, you adjust your production levels based on whether producing additional units will maximize your profit. For example, if your marginal cost of producing one more toy is $5 and the marginal revenue from selling it is $8, it makes sense to increase production since you would gain $3 in profit.