Break-Even Analysis for a Service Company Rotelco is a digital wireless service provider in the United States. In a recent year, it had approximately 100 direct subscribers (accounts) that generated revenue of $40,100. Costs and expenses for the year were as follows: Cost of revenue $19,200 Selling, general, and administrative expenses 10,800 Depreciation 4,400 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 to two decimal place and final answers to the nearest whole number. a. What is Rotelco's break-even number of accounts, using the data and assumptions above? accounts b. How much revenue per account would be sufficient for Rotelco to break even if the number of accounts remained constant?
Break-Even Analysis for a Service Company Rotelco is a digital wireless service provider in the United States. In a recent year, it had approximately 100 direct subscribers (accounts) that generated revenue of $40,100. Costs and expenses for the year were as follows: Cost of revenue $19,200 Selling, general, and administrative expenses 10,800 Depreciation 4,400 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 to two decimal place and final answers to the nearest whole number. a. What is Rotelco's break-even number of accounts, using the data and assumptions above? accounts b. How much revenue per account would be sufficient for Rotelco to break even if the number of accounts remained constant?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Break-Even Analysis for a Service Company
Rotelco is a digital wireless service provider in the United States. In a recent year, it had approximately 100 direct subscribers (accounts) that generated revenue of
$40,100. Costs and expenses for the year were as follows:
Cost of revenue
$19,200
10,800
Selling, general, and administrative expenses
Depreciation
4,400
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 to two decimal place and final answers to the nearest whole number.
a. What is Rotelco's break-even number of accounts, using the data and assumptions above?
accounts
b. How much revenue, per account would be sufficient for Rotelco to break even if the number of accounts remained constant?
per account
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