Question

Exercise 1-4 Fixed and Variable Cost Behavior [LO1-4] Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $600 and the variable cost per cup of coffee served is $0.74. 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 800 900 1,000 Fixed cost Variable cost Total cost Average cost per cup of coffee served Required 1 Required 2 >

Answer 1

Answer to Requirement 1: Fixed cost Variable cost ($0.74 * Number of cups) Total cost Average cost per cup of coffee served Cups of Coffee Served in a Week 800 900 600 $ 600 $ 592 $ 666 $ 1,192 $ 1,266 $ 1.49 $ 1.41 $ 1,000 600 740 1,340 1.34 | $ Answer to Requirement 2: The average cost per cup of coffee served decreases as the number of cups of coffee served in a week increases.