Chapter 1, Problem 4E

EXERCISE 1−4 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 $1,200 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. Round off the average cost per cup of coffee to the nearest tenth of a cent.

	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	?	?	?

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? Explain.