close solutoin list

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 Selling, general, and administrative expenses 9,765 Depreciation 2,239 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?

BuyFind

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307
BuyFind

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285866307

Solutions

Chapter
Section
Chapter 19, Problem 19.16EX
Textbook Problem

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
Selling, general, and administrative expenses 9,765
Depreciation 2,239

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?

Expert Solution

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Solution

*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.

Chapter 19 Solutions

Financial & Managerial Accounting
Show all chapter solutions
Ch. 19 - High-low method The manufacturing costs of...Ch. 19 - High-low method The manufacturing costs of...Ch. 19 - Contribution margin Michigan Company sells 10,000...Ch. 19 - Contribution margin Weidner Company sells 22,000...Ch. 19 - Break-even point Santana sells a product for 115...Ch. 19 - Break-even point Elrod Inc. sells a product for 75...Ch. 19 - Target profit Versa Inc. sells a product for 100...Ch. 19 - Target profit Scrushy Company sells a product for...Ch. 19 - Sales mix and break-even analysis Wide Open...Ch. 19 - Sales mix and break-even an analysis Einhorn...Ch. 19 - Operating leverage SungSam Enterprises reports the...Ch. 19 - Operating leverage Westminster Co. reports the...Ch. 19 - Margin of safety Melton Inc. has sales of...Ch. 19 - Margin of safety Junck Company has sales of...Ch. 19 - Classify costs Following is a list of various...Ch. 19 - Identify cost graphs The following cost graphs...Ch. 19 - Identify activity bases For a major university,...Ch. 19 - Identify activity bases From the following list of...Ch. 19 - Identify fixed and variable costs Intuit Inc....Ch. 19 - Relevant range and fixed and variable costs...Ch. 19 - High-low method Diamond Inc. has decided to use...Ch. 19 - High-low method for a service company Boston...Ch. 19 - Contribution margin ratio a. Segar Company budgets...Ch. 19 - Contribution margin and contribution margin ratio...Ch. 19 - Break even sales and sales to realize income from...Ch. 19 - Break even sales Anheuser-Busch InBev Companies,...Ch. 19 - Break-even sales Currently, the unit selling price...Ch. 19 - Break-even analysis The Junior League of...Ch. 19 - Break-even analysis Media outlets such as ESPN and...Ch. 19 - Break even analysis for a service company Sprint...Ch. 19 - Cost-volume-profit chart For the coming year,...Ch. 19 - Profit-volume chart Using the data for Loudermilk...Ch. 19 - Break-even chart Name the following chart, and...Ch. 19 - Break-even chart Name the following chart, and...Ch. 19 - Sales mix and break-even sales Dragon Sports Inc....Ch. 19 - Break-even sales and sales mix for a service...Ch. 19 - Margin of safety A. If Canace Company, with a...Ch. 19 - Break-even and margin of safety relationships At a...Ch. 19 - Operating leverage Beck Inc. and Bryant Inc. have...Ch. 19 - Items on variable costing income statement In the...Ch. 19 - Variable costing income statement On July 31,...Ch. 19 - Absorption costing income statement On June 30,...Ch. 19 - Classify costs Seymour Clothing Co. manufactures a...Ch. 19 - Break-even sales under present and proposed...Ch. 19 - Break-even sales and cost-volume-profit chart For...Ch. 19 - Break-even sales and cost-volume-profit chart Last...Ch. 19 - Sales mix and break even sales Data related to the...Ch. 19 - Contribution margin, break-even sales,...Ch. 19 - Classify costs Cromwell Furniture Company...Ch. 19 - Break-even sales under present and proposed...Ch. 19 - Break even sales and cost-volume-profit chart For...Ch. 19 - Break-even sales and cost-volume-profit chart Last...Ch. 19 - Sales mix and break even sales Data related to the...Ch. 19 - Contribution margin, break-even sales,...Ch. 19 - Ethics and professional conduct in business Edward...Ch. 19 - Break-even analysis Somerset Inc. has finished a...Ch. 19 - Variable costs and activity bases in decision...Ch. 19 - Variable costs and activity bases in decision...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
Define specific asset.

Accounting Information Systems

Explain cause-related marketing

MKTG 12:STUDENT ED.-TEXT

Should stockholder wealth maximization be thought of as a long-term or a short-term goal? For example, if one a...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

How are value streams identified and created?

Cornerstones of Cost Management (Cornerstones Series)