Chapter 1 4 Exercise 14 Fixed and Variable Cost Behavior LO1

Chapter 1 4 Exercise 1-4 Fixed and Variable Cost Behavior [LO1-4) 1.5 points Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $800 and the variable cost per cup of coffee served is $0.60. SkippedRequired: 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 Dos the average cost per cup of coffee served Increese, decrease, or remain the same as the number of cups of coffee served ina activity. week increases? Print Relerences Complete this question by entering your answers in the tabs below Required 1 Required 2 in toe foslowing ae wth your estimate d the company\'s tott cont and sveragoe cost per cup of coffeat he 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 1,500 1,600 Foxed cost Variable cost Total cost Average cost per cup of coffee served 0 S Required 2 43

Solution

Answer 1 Computation of estimates of the Company\'s Total cost and average cost per cup of coffee at the indicated level of activity Cups of coffee served in a week 1500 1600 1700 Fixed cost $800.00 $800.00 $800.00 Variable cost ($0.60 per cup of coffee) $900.00 $960.00 $1,020.00 Total Cost $1,700.00 $1,760.00 $1,820.00 Average cost per cup of coffee served $1.13 $1.10 $1.07 Answer 2 The average cost per cup of coffee served decrease as the number of cups of coffee served in a week increases.