Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Question
Chapter 20, Problem 16E
a.
To determine
Compute Company SN’s break-even number of accounts.
b.
To determine
Compute the revenue per account for break-even, if the number of accounts remains constant.
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Break-Even Analysis for a Service Company
Sprint Corporation is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 32.6 million direct subscribers (accounts) that generated revenue of $33,600 million. Costs and expenses for the year were as follows (in millions):
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Selling, general, and administrative expenses
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Depreciation
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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). In part (a) and (b), round all interim calculations and final answers to one decimal place.
a. What is Sprint’s break-even number of accounts, using the data and assumptions given?fill in the blank 1 million accounts
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Break-Even Analysis for a Service Company
Sprint Corporation is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 32.6 million direct subscribers (accounts) that generated revenue of $33,600 million. Costs and expenses for the year were as follows (in millions):
Cost of revenue
$13,389
Selling, general, and administrative expenses
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Depreciation
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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). In part (a) and (b), round all interim calculations and final answers to one decimal place.
a. What is Sprint’s break-even number of accounts, using the data and assumptions given?fill in the blank 1 million accounts
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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
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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). In part (a) and (b), round all interim calculations and final answers to one decimal place.
a. What is Sprint Nextel's break-even number of accounts, using the data and assumptions given?
b. How much revenue per account would be sufficient for Sprint Nextel to break even if the number of accounts remained constant?
Chapter 20 Solutions
Financial And Managerial Accounting
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