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 $52,800. Costs and expenses for the year were as follows: Cost of revenue Selling, general, and administrative expenses Depreciation $25,300 14,300 5,800 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

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 $52,800. Costs and expenses for the year were as follows: Cost of revenue Selling, general, and administrative expenses Depreciation $25,300 14,300 5,800 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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