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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. 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.)
Expert Answer
Variable cost/unit and total Fixed costs do not change with change in units.
| 2000 | 2100 | 2200 | |
| Fixed costs | $1200 | $1200 | `$1200 |
| Variable costs | (2000*0.22)=$440 | (2100*0.22)=$462 | `(2200*0.22)=$484 |
| Total costs | $1640 | $1662 | $1684 |
| Average cost(Total cost/Cups of coffee served) | (1640/2000)=$0.82 | (1662/2100)=$0.791 | (1684/2200)=$0.765. |
