ACCOUNTING
Warren, Reeve and Duchac
Financial Accounting
Managerial Accounting
Carl Warren, James M. Reeve, Jonathan E. Duchac
Chapter 21
EX 21-16 Sprint Nextelis one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 41.5 million direct subscribers (accounts) that generated revenue of $40,146 million. Costs and expenses for the year were as follows (in millions): Cost of revenue $17,191 Selling, general, and administrative expenses 12,673 Depreciation 5,711. Assume that 75% of the cost of revenue and 35% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts).
a. What is Sprint Nextel’s break-even number of accounts, using the data and assumptions above? Round units to one decimal place (in millions).
b. How much revenue per account would be sufficient for Sprint Nextel to break even if the number of accounts remained constant?
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