Question
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
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): Line Item Description Amount Cost of revenue $11,878 Selling, general, and administrative expenses 18,926 Depreciation and amortization 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-Mobiles break-even number of accounts, using the data and assumptions given?
b. How much revenue per account would be sufficient for T-Mobile to break even if the number of accounts remained constant?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started