1 answer

Exercise 1-4 (Algo) Fixed and Variable Cost Behavior [LO1-4] Espresso Express operates a number of espresso...

Question:

Exercise 1-4 (Algo) 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 $1,300 and the variable cost per cup of coffee served is $0.31.

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?

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
1,600 1,700 1,800
Fixed cost $496selected answer incorrect $527selected answer incorrect $558selected answer incorrect
Variable cost 1,796selected answer incorrect 1,827selected answer incorrect 1,858selected answer incorrect
Total cost $2,292 $2,354 $2,416
Average cost per cup of coffee served $1.433selected answer incorrect $1.385selected answer incorrect $1.342

Answers

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
1,600 1,700 1,800
Fixed cost 1300 1300 1300
Variable cost 1600*.31 = 496 527 558
Total cost 1796 1827 1858
Average cost per cup of coffee served 1.12 1.07 1.03

b) Decrease

.

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