Business, 21.04.2020 19:37 19cdeleon

Break-even analysis for a service company

Sprint Corporation (S) is one of the largest digital wireless service providers in the United States. 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). In part (a) and (b), round all interim calculations and final answers to one decimal place.

a. What is Sprint’s break-even number of accounts, using the data and assumptions given?
million accounts

b. How much revenue per account would be sufficient for Sprint to break even if the number of accounts remained constant?
$ million per account

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Break-even analysis for a service company

Sprint Corporation (S) is one of the largest...