Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Question
Chapter 20, Problem 16E
a.
To determine
Compute Company SN’s break-even number of accounts.
b.
To determine
Compute the revenue per account for break-even, if the number of accounts remains constant.
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Break-even analysis for a service company
Rotelco is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 100 direct subscribers (accounts) that generated revenue of $61,300. Costs and expenses for the year were as follows:
Cost of revenue
$28,800
Selling, general, and administrative expenses
19,600
Depreciation
6,700
Assume that 75% of the cost of revenue and 30% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts). In part (a) and (b), round all interim calculations and final answers to one decimal place.
a. What is Rotelco's break-even number of accounts, using the data and assumptions above? Round to the nearest whole number.fill in the blank 1 accounts
b. How much revenue per account would be sufficient for Rotelco to break even if the number of accounts remained constant? Round to the nearest dollar.$fill in the blank 2 per account
Break-Even Analysis for a Service Company
Sprint Corporation is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 32.6 million direct subscribers (accounts) that generated revenue of $33,600 million. Costs and expenses for the year were as follows (in millions):
Cost of revenue
$13,389
Selling, general, and administrative expenses
7,774
Depreciation
8,783
Assume that 70% of the cost of revenue and 30% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts). In part (a) and (b), round all interim calculations and final answers to one decimal place.
a. What is Sprint’s break-even number of accounts, using the data and assumptions given?fill in the blank 1 million accounts
b. How much revenue per account would be sufficient for Sprint to break even if the number of accounts remained constant?$fill in the blank 2 million per accoun
Break-Even Analysis for a Service Company
Sprint Corporation is one of the largest digital wireless
service providers in the United States. In a recent year,
it had approximately 32.6 million direct subscribers
(accounts) that generated revenue of $33,600 million.
Costs and expenses for the year were as follows (in
millions):
Cost of revenue
Selling, general, and administrative expenses
Depreciation
$13,389
7,774
8,783
Assume that 70% of the cost of revenue and 30% of the
selling, general, and administrative expenses are
variable to the number of direct subscribers (accounts).
In part (a) and (b), round all interim calculations
and final answers to one decimal place.
a. What is Sprint's break-even number of accounts,
using the data and assumptions given?
27.2 million accounts
b. How much revenue per account would be sufficient
for Sprint to break even if the number of accounts
remained constant?
million per account
Chapter 20 Solutions
Financial And Managerial Accounting
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