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: 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.Cups of Coffee Served in a Week 1,800 1,900 2,000Fixed cost . . . . . . . . . . . . . . . . . . . . . . . . . . ? ? ? Variable cost . . . . . . . . . . . . . . . . . . . . . . . . ? ? ?Total cost . . . . . . . . . . . . . . . . . . . . . . . . . . . ? ? ? Average cost per cup of coffee served . . . ? ? ?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 costs: These are costs which are incurred irrespective of the production or sale activities.…

Answered: Koffee Express operates a number of…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2CE

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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:

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.

Cups of Coffee Served in a Week 1,800 1,900 2,000

Fixed cost . . . . . . . . . . . . . . . . . . . . . . . . . . ? ? ?

Variable cost . . . . . . . . . . . . . . . . . . . . . . . . ? ? ?

Total cost . . . . . . . . . . . . . . . . . . . . . . . . . . . ? ? ?

Average cost per cup of coffee served . . . ? ? ?

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.

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