Question

espresso express operates a number of espresso coffee stands in busy suburban malls. the fixed weekly expense of a coffee stand is $1,200 and the variable cost per cup of coffee serves is $0.22.

1. fill in the following table with your estimates of the companys total 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?

Help Exercise 1-4 Fixed and Variable Cost Behavior (L01-4) Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,200 and the variable cost per cup of coffee served is $0.22. 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 2,000 2,100 2,200 Fixed cost Variable cost Total cost Average cost per cup of coffee served < Prev 3 of 7 Ili Next >

Answer 1

Solution A
Description	Cups of coffee served in a week
	2000	2100	2200
Fixed expense	$1,200	$1,200	$1,200
Variable cost per unit	0.22	0.22	0.22
Total variable cost	2000*0.22	2100*0.22	2200*0.22
Total variable cost	$440	$462	$484
Total fixed cost	$1,200	$1,200	$1,200
Total cost	$1,640	$1,662	$1,684
Average cost	1640/2000	1662/2100	1684/2200
Average cost	$0.82	$0.79	$0.77
Solution B
As the number of units increased, the variable cost per unit remains the same
and fixed cost in total remains the same. Due to the same total fixed cost, if units increase
the average fixed cost per unit decreases.
As a result, when the total number of units increases, the cost per unit decreases.

Answer 2

average cost should be rounded to 3 decimals so answers for the last two are actually 0.791 and 0.765 after rouding