Approximately 41.5 million direct subscribers (accounts) that generated revenue

Question

Approximately 41.5 million direct subscribers (accounts) that generated revenue of $40,146 million. Costs and expenses for the year were as follows (in millons)

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 subsribers (accounts)

I cannot figure out the blanks I have on the spreadsheet

Explanation / Answer

Costs Variable Fixed
Cost of Revenue $12,893 $4,298

Selling, general
adm. expenses $4,436 $8,237

Depreciation $5,711

Total $17,329 $18,246

Contribution Margin = $40,146 - $17,329 = $22,817

Contribution Margin Ratio = $22,817 / $40,146 = 56.83%

Break-even sales (dollars) = Fixed costs / CM ratio

= $18,246 / 56.83% = $32,106

Sales revenue per subscriber = $40,146 / 41.5m = $967.3

Break-even sales (units) = Break-even sales / Selling price per unit

= $32,106 / $967.37 = 33.2 million subscribers

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