Sprint Nextel is one of the largest digital wireless service providers in the United States. In a

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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?

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Managerial Accounting

ISBN: 978-1285866307

13th edition

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

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