Espresso Express operates a number of espresso coffee stands
Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,700 and the variable cost per cup of coffee served is $0.15. Required 1. Fill in the following table with your estimates of total costs and cost per cup of coffee at the indicated levels of activity for a coffee stand. (Round the Average cost per cup of coffee served to 3 decimal places.) Cups of Coffee Served in a Week 600 700 800 Fixed cost Variable cost Total cost Average cost per cup of coffee served 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? Increase Decrease Remain the same

Solution
1) Solution:
Cups of coffee served in a week
600
700
800
Fixed cost
1,700
1,700
1,700
Variable cost
90
105
120
Total cost
1,790
1,805
1,820
Average cost per cup of coffee served
2.983
2.579
2.275
Working:
Cups of coffee served in a week
600
700
800
Fixed cost
1,700
1,700
1,700
Variable cost
600*0.15
700*0.15
800*0.15
Total cost
1700+90
1700+105
1700+120
Average cost per cup of coffee served
2.983
2.579
2.275
2) Solution: decrease
Explanation: Because the fixed cost is spread over more cups of coffee thus the average cost of a cup of coffee decreases when the number of cups of coffee served increases
| Cups of coffee served in a week | 600 | 700 | 800 |
| Fixed cost | 1,700 | 1,700 | 1,700 |
| Variable cost | 90 | 105 | 120 |
| Total cost | 1,790 | 1,805 | 1,820 |
| Average cost per cup of coffee served | 2.983 | 2.579 | 2.275 |

