Break-Even Analysis Rotelco is one of the largest digital wireless service provi
ID: 2462689 • Letter: B
Question
Break-Even Analysis Rotelco is one of the largest digital wireless service providers In the United States. In a recent year. It had approximately 100 direct subscribers (accounts) that generated revenue of $50,100. Costs and expenses for the year were as follows: Assume that 70% of the cost of revenue and 25% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts). What is Rotelco's break-even number of accounts, using the data and assumptions above? Round to the nearest whole number.___accounts How much revenue per account mould be sufficient for Rotelco to break even if the number of accounts remained constant? Round to the nearest dollar.$___per account.Explanation / Answer
Hi,
The correct answer is as follows;
Total fixed cost = 0.30*24000+0.75*16500+5500
= 25075
Total variable cost = 0.70*24000+0.25*16500
= 20925
Variable cost per customer = 20295/1000
=20.295
1. Hence, Rotelco’s break-even number of acc = 25075/20.925
968.93
Or 969
2. total cost = 20295+25075
46000
Revenue per account needed = 45370/969
= 47.47