Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Break-even analysis for a service company T-Mobile US, Inc. (TMUS) is one of the largest digital wireless service providers in the United States. In

image text in transcribed

Break-even analysis for a service company 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 Depreciation and amortization 18,926 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). In part (a) and (b), round all interim calculations and final answers to one decimal place. a. What is T-Mobile's break-even number of accounts, using the data and assumptions given? 47.1 X million accounts b. How much revenue per account would be sufficient for T-Mobile to break even if the number of accounts remained constant? 301.7 X million per account Feedback Check 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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial And Managerial Accounting

Authors: Carl S. Warren, Jefferson P. Jones, William Tayler

16th Edition

0357714040, 9780357714041

More Books

Students also viewed these Accounting questions

Question

Compare social roles with gender roles. Critical T hinking

Answered: 1 week ago

Question

What are conversion costs? What are prime costs?

Answered: 1 week ago