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 $0.77. 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 Required 1Required 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 2,200 2,300 2,400 Fixed cost Variable cost Total cost Average cost per cup of coffee served Required 1 Required 2>

Explanation / Answer

Fixed Expense 1700 Variable Cost Per Cup 0.77 Required 1 Cups of Coffee Served in a Week 2200 2300 2400 Fixed Cost 1700 1700 1700 Variable Cost 1694 1771 1848 (Activity Level*Variable Cost Per Cup) Total Cost 3394 3471 3548 Average Cost per Cup of Coffee Served 1.543 1.509 1.478 (Total Cost/Activity Level) Average Cost Decreases since the Variable Cost Per Cup is same and Fixed Cost per Cup will decrease as the level of Activity will increase

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