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 $2,500 and the variable cost per cup of coffee served is $0.75. Required: 1. 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.) Cups of Coffee Served in a Week 1,600 1,700 1,80 Fixed cost Variable cost Total cost Average cost per cup of coffee served 2. Does the average cost per cup of coffee served increase, decrease, or remain the same s the number of cups of coffee served in a week increases? Increase Decrease Remain the same

Explanation / Answer

1)

Cost per cup of coffee served = Total cost / Cups of coffee served in a week

2) Decreases

Cups of Coffee Served in a Week 1,600 1,700 1,800 Fixed cost $2,500 $2,500 $2,500 Variable cost($0.75 * 1,600);($0.75 * 1,700);($0.75 * 1,800) $1,200 $1,275 $1,350 Total cost $3,700 $3,775 $3,850 Average cost per cup of coffee served $2.313 $2.221 $2.139

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