T-Mobile US, Inc. (TMUS) is one of the largest digital wireless service providers in the United States. In a recent year, it had 102.1 million subscribers (accounts) that generated service revenue of $50,395 million. Costs and expenses for the year were as follows (in millions):
Cost of revenue .............................................................................. $11,878
Selling, general, and administrative expenses ............................ 18,926
Depreciation and amortization ..................................................... 14,151
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).
a. What is T-Mobile’s break-even number of accounts, using the data and assumptions given?
b. How much revenue per account would be sufficient for T-Mobile to break even if the number of accounts remained constant?