Mid Help Save 1100 and the variable cost per cup of coffee s

Mid Help Save $1,100 and the variable cost per cup of coffee served is $0.54 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 ) 2. Does the average cost per cup of coffee served increase, decrease, or remain the same as the number of cups of coffee served ina 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 levels of activity. (Round off the average cost per cup of coffee to the nearest tenth of a cent.) Cups of Coffee 1,000 1,100

Solution

1.

(Average cost per cup of cofee served = Total cost ÷ cups of cofee served in a week)

2. Answer: B) Decrease

The average cost of a cup of coffee declines as the number of cups of coffee served increases because the fixed cost is spread over more cups of coffee.

	Cost of Coffee served in a Week
	1000	1100	1200
Fixed cost	1100	1100	1100
Variable cost	540	594	648
Total cost	1640	1694	1748
Average cost per cup of coffee served	1.64	1.54	1.46