Fixed and Variable Cost Behavior [LO3]

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 $0.26.

Required:

1. Fill in the following table with your estimates of total costs and average cost 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.

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? Explain.

Fixed cost Variable cost Total cost... Average cost per cup of coffee served.. Cups of Coffee Served in a Week 2,000 1,800 1,900 ? ? ? ? ???? ????