Problem #7: Exercise 20-16 on page 1035 of your textbook. Use this template to submit your work for this problem: FinMan 15e_EX 20(6)-16.xlsx

Chapter 20 Cost-Volume-Profit Analysis 1035 EX 20-16 Break-even analysis for a service company Obj. 3 Sprint Corporation (S) is one of the largest digital wireless service providers in the United States. EXCEL TEMPLATE REAL WORLD In a recent year, it had approximately 60 million direct subscribers (accounts) that generated revenue of $33,347 million. Costs and expenses for the year were as follows (in millions): Cost of revenue $14,958 Selling, general, and administrative expenses 7,994 Depreciation and amortization 8,150 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). a. What is Sprint's break-even number of accounts, using the data and assumptions given? Round to one decimal place. b. How much revenue per account would be sufficient for Sprint to break even if the number of accounts remained constant? Round to one decimal place.b. Total Fixed Costs Break-even (in $ revenue, in millions): Break-Even (in accounts) = Revenue per Account Variable Cost per Account Total costs Divided by number of accounts 60.0 $18,233.2 Break-even million $18,233.2 = $341.3 = 53.4 million (rounded) accounts Supporting calculations: Revenue per account (in millions): Total revenue (in millions) Total accounts (in millions) Revenue per account (in millions) Variable cost per account (in millions): Variable Full Amount Percentage Cost of revenue (in millions) Selling, gen., admin. exp. (in millions) Total variable costs Divided by number of accounts Variable cost per account (in millions) Total fixed costs (in millions): Fixed Full Amount Percentage Cost of revenue (in millions) Selling, gen., admin. exp. (in millions) Depreciation Total fixed costs (in millions)