Question

Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $2,000 and the variable cost per cup of coffee served is $0.46. points 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? eBook Hint Complete this question by entering your answers in the tabs below. Print References 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 1,700 1,800 1,900 Fixed cost Variable cost Total cost Average cost per cup of coffee served 0 $ 0 $ Required 1 Required 2 > Mc

Answer 1

1)

	Cups of Coffee Served in a Week
	1,700	1,800	1,900
Fixed Costs	$2,000	$2,000	$2,000
Add: Variable costs (1,700 * $0.46); (1,800 * $0.46); (1,900 * $0.46)	$782	$828	$874
Total Cost	$2,782	$2,828	$2,874
Average cost per cup of coffee served ($2,782/1,700); ($2,828/1,800); ($2,874/1,900)	$1.64	$1.57	$1.51

2)

Decrease.

When the number of coffees served increases from 1,700 to 1,800 and from 1,800 to 1,900 cups, the average cost per unit decreases from $1.64 to $1.57 and from $1.57 to $1.51 per cup respectively.