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:
