Question

espresso Express operates a number of espresso coffee stands in busy suburban malls

The fixed weekly expense of a coffee stand is 2.300 $ and the variable cost per cup of coffee served is 0.69 $. 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?
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?

fixed cost, variable cost, total cost. average cost per cup of coffee served.
Cups of coffee served in a week: 1400, 1500. 1600.

Answer 1

Fixed weekly cost of coffee stand per weeek = $2,300

Variable cost per cup of coffee = $0.69

Computation of total cost and average cost per cup of coffee at different levals

Coffee served in a week	Total variable cost	Total foxed cost	Total cost	Average cost per cup
1400	$966	$2,300	$3,266	$2.33 ($3,266/1400)
1500	$1,035	$2,300	$3,335	$2.22 ($3,335/1500)
1600	$1,104	$2,300	$3,404	$2.13 ($3,404/1600)

average cost per cup of coffee served is decreasing each week when the foffee served is increasig.

The reason behind is, the fixed cost is remaining same even though number of coffee served increasing.