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 $1,200 and the variable cost per cup of coffee served is $0.22. Required: 1. Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated levels of activity. 2. 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? Complete this question by entering your answers in the tabs below Required1Required 2 Fill in the following table with your estimates of the company's total cost and average cost per cup of coffee at the indicated levels of activity. (Round the "Average cost per cup of coffee served" to 3 decimal places.) Cups of Coffee Served in a Week 2,000 1,200 S 2,100 1,200S Fixed cost Variable cost Total cost Average cost per cup of coffee 440 1,640 S 0.820 1,200 484 ,684 462 1,662 S served Required 2>

Explanation / Answer

NOTE:Total fixed costs and variable cost/unit do not change with change in units.

b.Hence the average cost per cup of coffee decreases as the numbewr of cups of coffee served in a week increases,

2000 2100 2200 Fixed costs 1200 1200 1200 Variable cost (0.22*2000)=440 (0.22*2100)=462 (0.22*2200)=484 Total cost 1640 1662 1684 Average cost(Total cost/cups seved) (1640/2000)=$0.82 (1662/2100)= $0.791 (1684/2200)= $0.765

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