Question
Rotelco is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 100 million direct subscribers
Rotelco is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 100 million direct subscribers (accounts) that generated revenue of $29,200 million. Costs and expenses for the year were as follows:
Cost of revenue | $12,300 | |
| $8,800 | |
| $3,200 |
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).
a. What is Rotelco's break-even number of accounts, using the data and assumptions above? Round to the nearest whole number. __ million accounts
b. How much revenue per account would be sufficient for Rotelco to break even if the number of accounts remained constant? Round to the nearest dollar. $__ million per account
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