Accounting
27th Edition
ISBN: 9780357155899
Author: Carl S. Warren; James M. Reeve; Jonathan Duchac
Publisher: Cengage Learning US
expand_more
expand_more
format_list_bulleted
Question
Chapter 21, Problem 21.16EX
a.
To determine
Break-even Analysis: It refers to an analysis of the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:
To compute: Company SN’s break-even number of accounts.
b.
To determine
To compute: the revenue per account for break-even if the number of accounts remains constant.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
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). In part (a) and (b), round all interim calculations and final answers 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?
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
$20,841
Selling, general, and administrative expenses
9,765
Depreciation
2,239
Assume that 70% of the cost of revenue and 30% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts). In part (a) and (b), round all interim calculations and final answers to one decimal place.
a. What is Sprint Nextel's break-even number of accounts, using the data and assumptions given?fill in the blank 1 million accounts
b. How much revenue per account would be sufficient for Sprint Nextel to break even if the number of accounts remained constant?$fill in the blank 2 million per account
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). 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 21 Solutions
Accounting
Ch. 21 - Describe how total variable costs and unit...Ch. 21 - How would the following costs be classified...Ch. 21 - Describe how total fixed costs and unit fixed...Ch. 21 - In applying the high-low method of cost estimation...Ch. 21 - If fixed costs Increase, what would be the impact...Ch. 21 - An examination of the accounting records of...Ch. 21 - Prob. 7DQCh. 21 - Both Austin Company and Hill Company had the same...Ch. 21 - How does the sales mix affect the calculation of...Ch. 21 - What does operating leverage measure, and how is...
Ch. 21 - High-low method The manufacturing costs of...Ch. 21 - High-low method The manufacturing costs of...Ch. 21 - Contribution margin Lanning Company sells 160,000...Ch. 21 - Contribution margin Weidner Company sells 22,000...Ch. 21 - Prob. 21.3APECh. 21 - Prob. 21.3BPECh. 21 - Prob. 21.4APECh. 21 - Prob. 21.4BPECh. 21 - Prob. 21.5APECh. 21 - Prob. 21.5BPECh. 21 - Operating leverage SungSam Enterprises reports the...Ch. 21 - Prob. 21.6BPECh. 21 - Margin of safety Liu Inc. has sales of 48,500,000,...Ch. 21 - Margin of safety Junck Company has sales of...Ch. 21 - Classify costs Following is a list of various...Ch. 21 - Identify cost graphs The following cost graphs...Ch. 21 - Prob. 21.3EXCh. 21 - Identify activity bases From the following list of...Ch. 21 - Identify fixed and variable costs Intuit Inc...Ch. 21 - Relevant range and fixed and variable costs Vogel...Ch. 21 - High-low method Ziegler Inc. has decided to use...Ch. 21 - High-low method for a service company Boston...Ch. 21 - Contribution margin ratio a. Yountz Company...Ch. 21 - Contribution margin and contribution margin ratio...Ch. 21 - Prob. 21.11EXCh. 21 - Break-even sales Anheuser-Busch InBev Companies,...Ch. 21 - Break even sales Currently, the unit .selling...Ch. 21 - Prob. 21.14EXCh. 21 - Prob. 21.15EXCh. 21 - Prob. 21.16EXCh. 21 - Prob. 21.17EXCh. 21 - Prob. 21.18EXCh. 21 - Prob. 21.19EXCh. 21 - Prob. 21.20EXCh. 21 - Prob. 21.21EXCh. 21 - Break-even sales and sales mix for a service...Ch. 21 - Margin of safety a. If Canace Company, with a...Ch. 21 - Prob. 21.24EXCh. 21 - Operating leverage Beck Inc. and Bryant Inc. have...Ch. 21 - Items on variable costing income statement In the...Ch. 21 - Variable costing income statement On July 31, the...Ch. 21 - Appendix Absorption costing income statement On...Ch. 21 - Classify costs Seymour Clothing Co. manufactures a...Ch. 21 - Prob. 21.2APRCh. 21 - Prob. 21.3APRCh. 21 - Prob. 21.4APRCh. 21 - Sales mix and break-even sales Data related to the...Ch. 21 - Contribution margin, break-even sales,...Ch. 21 - Classify costs Cromwell Furniture Company...Ch. 21 - Prob. 21.2BPRCh. 21 - Break-even sales and cost-volume-profit chart For...Ch. 21 - Prob. 21.4BPRCh. 21 - Prob. 21.5BPRCh. 21 - Contribution margin, break-even sales,...Ch. 21 - Prob. 21.1CPCh. 21 - Communication Sun Airlines is a commercial airline...Ch. 21 - Break-even analysis Somerset Inc. has finished a...Ch. 21 - Variable costs and activity bases in decision...Ch. 21 - Variable costs and activity bases in decision...
Knowledge Booster
Similar questions
- 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 $13,389 Selling, general, and administrative expenses 7,774 Depreciation 8,783 Assume that 70% of the cost of revenue and 30% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts). In part (a) and (b), round all interim calculations and final answers to one decimal place. a. What is Sprint’s break-even number of accounts, using the data and assumptions given?fill in the blank 1 million accounts b. How much revenue per account would be sufficient for Sprint to break even if the number of accounts remained constant?$fill in the blank 2 million per accounarrow_forwardBreak-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 Selling, general, and administrative expenses Depreciation $13,389 7,774 8,783 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? 27.2 million accounts b. How much revenue per account would be sufficient for Sprint to break even if the number of accounts remained constant? million per accountarrow_forwardBreak-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 $13,389 Selling, general, and administrative expenses 7,774 Depreciation 8,783 Assume that 70% of the cost of revenue and 30% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts). In part (a) and (b), round all interim calculations and final answers to one decimal place. a. What is Sprint’s break-even number of accounts, using the data and assumptions given?fill in the blank 1 million accounts b. How much revenue per account would be sufficient for Sprint to break even if the number of accounts remained constant?$fill in the blank 2 million per accountarrow_forward
- Break-even analysis for a service company Sprint Corporation (S) is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 60 million direct subscribers (accounts) that generated revenue of $33,347 million. Costs and expenses for the year were as follows (in millions): Cost of revenue $14,958 Selling, general, and administrative expenses 7,994 Depreciation and amortization 8,150 Assume that 30% of the cost of revenue and 70% of the selling, general, and administrative expenses are fixed 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? b. How much revenue per account would be sufficient for Sprint to break even if the number of accounts remained constant?arrow_forwardBreak-even analysis for a service company Sprint Corporation (S) is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 60 million direct subscribers (accounts) that generated revenue of $33,347 million. Costs and expenses for the year were as follows (in millions): Cost of revenue Selling, general, and administrative expenses Depreciation and amortization $14,958 7,994 8,150 Assume that 30% of the cost of revenue and 70% of the selling, general, and administrative expenses are fixed 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? million accounts b. How much revenue per account would be sufficient for Sprint to break even if the number of accounts remained constant? million per accountarrow_forwardBreak-even analysis for a service company Rotelco is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 100 direct subscribers (accounts) that generated revenue of $61,300. Costs and expenses for the year were as follows: Cost of revenue $28,800 Selling, general, and administrative expenses 19,600 Depreciation 6,700 Assume that 75% of the cost of revenue and 30% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts). In part (a) and (b), round all interim calculations and final answers to one decimal place. a. What is Rotelco's break-even number of accounts, using the data and assumptions above? Round to the nearest whole number.fill in the blank 1 accounts b. How much revenue per account would be sufficient for Rotelco to break even if the number of accounts remained constant? Round to the nearest dollar.$fill in the blank 2 per accountarrow_forward
- 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 $40,100. Costs and expenses for the year were as follows: Cost of revenue $18,400 Selling, general, and administrative expenses 11,600 Depreciation 4,400 Assume that 65% of the cost of revenue and 40% 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 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 per accountarrow_forwardBreak-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 $52,800. Costs and expenses for the year were as follows: Cost of revenue Selling, general, and administrative expenses Depreciation $25,300 14,300 5,800 Assume that 75% 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 accountarrow_forwardеВook updates now or try tonight? Lat 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 7,774 Depreciation 8,783 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? 26.9 X million accounts b. How much revenue per account would be sufficient for Sprint to break even if the number of accounts remained constant? 932.6 X million per accountarrow_forward
- Rotelco is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 100 direct subscribers (accounts) that generated revenue of $61,100. Costs and expenses for the year were as follows: Cost of revenue $26,300 Selling, general, and administrative expenses 16,500 Depreciation 6,700 Assume that 60% of the cost of revenue and 40% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts). In part (a) and (b), round all interim calculations and final answers to one decimal place. a. What is Rotelco's break-even number of accounts, using the data and assumptions above? Round to the nearest whole number. accounts b. How much revenue per account would be sufficient for Rotelco to break even if the number of accounts remained constant? Round to the nearest dollar.$ per accountarrow_forwardeBook Calculator Print Item Break-even analysis for a service company Rotelco is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 100 direct subscribers (accounts) that generated revenue of $49,200. Costs and expenses for the year were as follows: Cost of revenue $22,100 Selling, general, and administrative expenses 15,700 Depreciation 5,400 Assume that 65% 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 Rotelco's break-even number of accounts, using the data and assumptions above? Round to the nearest whole number. accounts b. How much revenue per account would be sufficient for Rotelco to break even if the number of accounts remained constant? Round to the nearest dollar. per account Check My Work 5 more Check My Work uses…arrow_forwardRequired information Skip to question [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales $ 1,500,000 Variable expenses 730, 000 Contribution margin 770, 000 Fixed expenses 470,000 Net operating income $ 300,000 Average operating assets $ 937,500 At the beginning of this year, the company has a $362, 500 investment opportunity with the following cost and revenue characteristics: Sales $ 580,000 Contribution margin ratio 70% of sales Fixed expenses $ 319,000 The company's minimum required rate of return is 10%. 8. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year? (Round your answer to 2 decimal places.)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub