Break-even analysis for a service companySprint Nextel is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 32.5 million direct subscribers (accounts) that generated revenue of $35,345 million. Costs and expenses for the year were as follows (in millions): Cost of revenue $20,841 $20,841 Selling, general, and administrative expenses 9,765 Deprecation 2239 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).a. What is sprint Nextel's break-even number of accounts, using the data and assumptions given? Round units (accounts) and per-account amounts to one decimal place. b. How much revenue per account would be sufficient for Sprint Nextel to break-even if the number of accounts remained constant?
Break-even analysis for a service company
Sprint Nextel is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 32.5 million direct subscribers (accounts) that generated revenue of $35,345 million. Costs and expenses for the year were as follows (in millions):
| Cost of revenue $20,841 | $20,841 |
| Selling, general, and administrative expenses | 9,765 |
| Deprecation | 2239 |
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).
a. What is sprint Nextel's break-even number of accounts, using the data and assumptions given? Round units (accounts) and per-account amounts to one decimal place.
b. How much revenue per account would be sufficient for Sprint Nextel to break-even if the number of accounts remained constant?
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