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 100
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 $55,400. Costs and expenses for the year were as follows:
Cost of revenue | $24,900 |
Selling, general, and administrative expenses | 18,300 |
Depreciation | 6,100 |
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 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 1 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 2 per account
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