Break-even analysis for a service company

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). In part (a) and (b), round all interim calculations and final answers to one decimal place.

a. What is Sprint Nextel's break-even number of accounts, using the data and assumptions given? million accounts

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

Margin of Safety

a. If Canace Company, with a break-even point at $960,000 of sales, has actual sales of $1,200,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number.

1. $

2. %

b. If the margin of safety for Canace Company was 20%, fixed costs were $1,875,000, and variable costs were 80% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.) $

Costs and eoxpenses for the year were as follows Cin milions) Cost of revee 520,841 eling, general and Depreciation fnal arswe to ane decimal place Ho much ewenue per account Hould