Question

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 $36,300. Costs and expenses for the year were as follows: Cost of revenue $16,300 Selling, general, and administrative expenses 11,600 Depreciation 4,000 Assume that 60% 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. 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. $ per account

Answer 1