Espresso Express operates a number of espresso coffee stands in busy suburban ma

Question

Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,700 and the variable cost per cup of coffee served is $0.24.

Fill in the following table with your estimates of total costs and cost per cup of coffee at the indicated levels of activity for a coffee stand. (Round the Average cost per cup of coffee served to 3 decimal places.)

Does the average cost per cup of coffee served increase, decrease, or remain the same as the number of cups of coffee served in a week increases?

Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,700 and the variable cost per cup of coffee served is $0.24.

Explanation / Answer

Cups of Coffee Served in a Week 2400 2500 2600   Fixed cost $     1,700 $       1,700 $       1,700   Variable cost 0.24*2400,0.24*2500,0.24*2600 $       576 $          600 $          624   Total cost $     2,276 $       2,300 $       2,324   Average cost per cup of coffee served 0.948 0.920 0.894 2276/2400 2300/2500 2324/2600 2 Decrease because the fixed cost is spread over more cups of coffee

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