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Break-Even Analysis for a Service Compar Rotelco is a digital wireless service provide in the United States. In a recent year, it ha approximately 100 direct subscribers

Break-Even Analysis for a Service Compar Rotelco is a digital wireless service provide in the United States. In a recent year, it ha approximately 100 direct subscribers

FINANCIAL ACCOUNTING
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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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 $46,400. Costs and expenses for the year were as follows: Cost of revenue Selling, general, and administrative expenses Depreciation $19,000 14,400 5,100 Assume that 70% of the cost of revenue and 25% 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 1 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 2 per account
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 $46,400. Costs and expenses for the year were as follows: Cost of revenue Selling, general, and administrative expenses Depreciation $19,000 14,400 5,100 Assume that 70% of the cost of revenue and 25% 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 1 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 2 per account
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