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 $1,100 and the variable cost per cup of coffee served is $0.81.

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.)

  

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?

Cups of Coffee served in a week: 800 900 1000 Fixed Cost Variable Cost Total Cost Average Cost per cup of coffee sold

Explanation / Answer

as fixed cost remains same ; it will be same for all three colums

variable cost =number of cups *0.81

total cost =fixed cost+variable cost

and average cost =total cost/number of cups

hence from above formuals

a)

2) from above we can see that   average cost per cup of coffee served decrease as the number of cups of coffee served in a week increases

Cups of Coffee served in a week: $800 $900 $1,000 Fixed Cost $1,100 $1,100 $1,100 Variable Cost $648 $729 $810 Total Cost $1,748 $1,829 $1,910 Average Cost per cup of coffee sold $2.185 $2.032 $1.910

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.