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 $$44,600.$ Costs and expenses for the year were as follows:

Cost of revenue

$$19,600$

$14,300$

$4,900$

Selling, general, and administrative expenses

Depreciation

Assume that $75\%$ 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?

$x$ accounts

b$.$ How much revenue per account would be sufficient for Rotelco to break even if the number of accounts remained constant?

$ per account

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Cheok My Work

a$.$ Fixed costs divided by unit contribution margin equals break$-$even point in units.

b$.$ Fixed costs divided by $x-$ variable costs equals number of subscribers, Solving for $x$ will result in the break$-$even revenue per account.