Question

Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $700 and the variable cost per cup of coffee served is $0.72 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 1 Required 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 1,500 1,600 1,700 Average cost per cup of cofee serve Required 2

Answer 1

		Cups of coffee served in a week
		1500	1600	1700
	Fixed cost	$                 700	$                 700	$                 700
	Variable cost	$             1,080	$             1,152	$             1,224
	Total cost	$             1,780	$             1,852	$             1,924
	Average cost per cup of coffee sold	$             1.187	$             1.158	$             1.132
	The Average cost per cup of coffee sold decreases as the number of cups sold increases
	Workings:
		Cups of coffee served in a week
		1500	1600	1700
	Fixed cost	$                 700	$                 700	$                 700
Add:	Variable cost	$0.72 X 1500	$0.72 X 1600	$0.72 X 1700
	Total cost	$             1,780	$             1,852	$             1,924
	Average cost per cup of coffee sold	$1780 / 1500	$1852 / 1600	$1924 / 1700