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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
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.
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