Break-Even Analysis for a Service CompanyRotelco is a digital wireless service provider in the United States. In a recent year, it had approximately 100 direct subscribers (accounts) thatgenerated revenue of $52,800. Costs and expenses for the year were as follows:Cost of revenueSelling, general, and administrative expensesDepreciation$25,30014,3005,800Assume that 75% of the cost of revenue and 30% of the selling, general, and administrative expenses are variable to the number of directsubscribers (accounts). In part (a) and (b), round all interim calculations to two decimal place and final answers to the nearestwhole number.a. What is Rotelco's break-even number of accounts, using the data and assumptions above?accountsb. 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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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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Review Annual Profit Rate Given the following information compute the annual profit rate: Investment Duration (months) Balance Account 1000 250000 150000 12 24 6 Profit Distributable 30 23500 1500 Application Mudaraba The Unre tricted Investment Accounts (UIA) of an Islamic Bank are based on a Mudaraba agreements with a profit-sharing ratio of 40% (Mudarib) and 60% (Capital Provider). The Islamic bank invested the UIA balance of QR 2.500.000 million in an oil company for one year with the agreement to share the profit with the oil company using the following ratio 55% (Mudarib) and 45% (Capital Provider). At the end of the year the oil company earned QR 125.000 as profit. Find the income distributable to the UIA holders. Find the UIA holders annual profit rate. Suppose the market annual profit rate for the same type of Unrestricted Investment Accounts is 1.75 %. What would be the new profit-sharing ratio between the Islamic Bank and the Unrestricted Investment Accounts holders.
Required information Skip to question [The following information applies to the questions displayed below.] King Mattresses sells both mattress sets and bed frames. Last quarter, total sales were $70,000 for mattress sets and $45,000 for bed frames. Return on investment (ROI) was 15% for both divisions, while asset turnover (AT) was 3 for mattress sets and 3 for bed frames. Compute King Mattresses’s total return on sales (ROS) for the quarter.
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 $18,400 Selling, general, and administrative expenses 11,600 Depreciation 4,400 Assume that 65% of the cost of revenue and 40% 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? fill in the blank accounts b. How much revenue per account would be sufficient for Rotelco to break even if the number of accounts remained constant? $ fill in the blank per account
H1.
Segment Contribution Margin Analysis The operating revenues of the three largest business segments for Time Warner, Inc., for a recent year follow. Each segment includes a number of businesses, examples of which are indicated in parentheses. Time Warner, Inc.Segment Revenues(in millions) Turner (cable networks and digital media) $35,400 Home Box Office (pay television) 67,500 Warner Bros. (films, television, and videos) 60,100 Assume that the variable costs as a percent of sales for each segment are as follows: Turner 31% Home Box Office 25% Warner Bros. 35% a. Determine the contribution margin and contribution margin ratio for each segment from the information given. When required, round to the nearest whole millionth (for example, round 5,688.7 to 5,689). Round contribution margin ratio to whole percents for each segment from the information given. Turner Home Box Office Warner Bros. Revenues $ $ $ Variable costs…
еВook updates now or try tonight? Lat 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? 26.9 X million accounts b. How much revenue per account would be sufficient for Sprint to break even if the number of accounts remained constant? 932.6 X million per account
Calculating Economic Value Added Barnard Manufacturing earned operating income last year as shown in the following income statement: Sales $4,000,000 Cost of goods sold 2,100,000 Gross margin $1,900,000 Selling and administrative expense 1,100,000 Operating income $800,000 Less: Income taxes (@ 40%) 320,000 Net income $480,000 At the beginning of the year, the value of operating assets was $2,700,000. At the end of the year, the value of operating assets was $2,300,000. Total capital employed equaled $1,400,000. Barnard’s actual cost of capital is 12%. Required: Calculate the EVA for Barnard Manufacturing.
Nextel Communications, Inc. is one of the largest digital wireless service providers in the United States. In a recent year, it had 8,666,500 accounts that generated revenues of $7,689,000,000. Costs and expenses were as follows: Cost of revenue$ 2,869,000,000 Selling, general and administrative expenses 3,020,000,000 Depreciation 1,746,000,000 Assume that 65% of the cost of revenue and 55% of the selling, general and administrative expenses are variable to the number of accounts.Required: a) What is Nextel’s break-even number of accounts using the data and assumptions above? Round any per-unit computations to the nearest dollar. b) How much revenue per account would be sufficient for Nextel to break even if the number of accounts remained constant?

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