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?
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
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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