Question
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
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 $40,600. Costs and expenses for the year were as follows: Cost of revenue $17,500 Selling, general, and administrative expenses Depreciation 11,400 4,500 Assume that 70% of the cost of revenue and 35% 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? 70 accounts b. How much revenue per account would be sufficient for Rotelco to break even if the number of accounts remained constant? 334 per account
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