Fixed and variable cost behavior
Koffee Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,100 and the variable cost per cup of coffee served is $.26.
Required:
1.Fill in the following table with your estimates of total costs and average costs per cup of coffee at the indicated levels of activity for a coffee stand. Round off the cost of a cup of coffee to the nearest tenth of a cent.
Does the average cost per cup served increase, decrease, or remain the same as the number of cups of coffee served in a week increases? Explain.
Cups of Coffee Served in a Week
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2,000 1,800 1,900
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Fixed Cost
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Variable costs
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Total cost
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Average cost per cup of coffee served
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2. Does the average cost per cup served increase, decrease, or remain the same as the number of cups of coffee served in a week increases? Explain.