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Elodia [21]
3 years ago
15

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.

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
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
Business
1 answer:
sergey [27]3 years ago
7 0

Answer:

1.

* Number of Cups of coffee served in a week is 1,800:

Fixed cost: $1,100

Variable cost: $0.26

Total cost average cost per cup: $0.87 ( which is calculated as Total Fixed cost/Total of cups served + Variable cost per unit = 1,100/1,800 + 0.26)

* Number of Cups of coffee served in a week is 1,900:

Fixed cost: $1,100

Variable cost: $0.26

Total cost average cost per cup: $0.84 ( which is calculated as Total Fixed cost/Total of cups served + Variable cost per unit = 1,100/1,900 + 0.26)

* Number of Cups of coffee served in a week is 2,000:

Fixed cost: $1,100

Variable cost: $0.26

Total cost average cost per cup: $0.81 ( which is calculated as Total Fixed cost/Total of cups served + Variable cost per unit = 1,100/2,000 + 0.26)

2.

The average cost per cup of coffee served decreases as the number of cups of coffee served in a week increases.

This is because average cost per cup of coffee served is equal to the sum of allocated fixed cost to one cup of coffee + variable cost of one cup of coffee. Although the variable cost of one cup of coffee remains the same given changes in the number of cups served, the allocated fixed cost to one cup of coffee decreases as the cups served increases as Total fixed cost remained the same, yet it will be allocated to more cup served, so the amount allocated to one cup served will decreases.

A formula will make it easy to understand:

Average cost per cup of coffee served = Variable Cost + Total Fixed cost/Total of cups served. Variable cost and total fixed cost remains the same with the variation of number of cup served; thus as number of cups served increases, Average cost per cup of coffee served decreases.

Explanation:

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The question is incomplete:

If Farmer Brown plants no seeds on his farm, he gets no harvest. If he plants 1 bag of seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels. If he plants 3 bags, he gets 12 bushels. A bag of seeds costs $120, and seeds are his only cost.

Farmer Brown's total-cost curve is

a. increasing at an increasing rate.

b. increasing at a decreasing rate.

c. increasing at a constant rate.

d. decreasing.

Answer:

a. increasing at an increasing rate.

Explanation:

To determine the answer, you can create a graph with the information given hich is attached.

You can see that the curve is increasing and because of that you can eliminate option d that is decreasing. Then, you have to consider that increasing at a constant rate would show an straight line which is not the case. Also, increasing at a decreasing rate would show a decreasing slope which is not what you see in the graph. Because of that, the answer is that Farmer Brown’s total cost curve is increasing at an increasing rate because the graphs shows an increasing slope.

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Backstreets Co. recently acquired all of Jungleland Inc.’s net assets in a business acquisition. The cash purchase price was $6.
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Answer:

The goodwill is $1.1 million

Explanation:

In this question, first we have to compute the net asset which is shown below:

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where,

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And, the total liabilities = long term note payable = $1.5 million

So, the net asset would equal to

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B.13%

C. $21.75

Explanation:

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Therefore How large a loss in dollar terms will existing FARO shareholders experience on the announcement date will be $117 millions

B. Calculation to determine What percentage of the value of FARO’s existing equity prior to the announcement is this expected gain or loss

First step is to calculate the Existing Shares Value

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C. Calculation to determine At what price should FARO expect its existing shares to sell immediately after the announcement

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