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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 $53,500. Costs and expenses for the year were as follows: Cost of revenue Selling, general, and administrative expenses Depreciation $21,900 17,100 5,900 Assume that 80% 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

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 $53,500. Costs and expenses for the year were as follows: Cost of revenue Selling, general, and administrative expenses Depreciation $21,900 17,100 5,900 Assume that 80% 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
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 $53,500. Costs and expenses for the year were as follows: Cost of revenue Selling, general, and administrative expenses Depreciation $21,900 17,100 5,900 Assume that 80% 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
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 $53,500. Costs and expenses for the year were as follows: Cost of revenue Selling, general, and administrative expenses Depreciation $21,900 17,100 5,900 Assume that 80% 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
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