Sprint Nextel is one of the largest digital wireless service providers in the Un

Question

Sprint Nextel is 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): 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). What is Sprint Nextel's break even number of accounts, using the data and assumptions above? Round units to one decimal place (in millions). How much revenue per account would be sufficient for Sprint Nextel to break even if the number of accounts remained constant? For the coming year, Paladin Inc, anticipates fixed costs of $120,000 a unit variable cost of $60, and a unit selling price of $90. The maximum within

Explanation / Answer

Revenue from recent years 40,146.00 Variable Costs 75% of Cost of Revenue 12,893.25 33% of Selling , General and Administrative Expenses 4,224.33 (17,117.58) Contribution 23,028.42 P/V Ratio 0.57 Fixed Expenses : 25% of Cost of Revenue (4,297.75) 67% of Selling , General and Administrative Expenses (8,491.00) Depreciation (5,711.00) Total Fixed Expenses 18,499.75 or , 18,500.00 BEP Sales (Fixed Costs / P/V Ratio) 18500 / 0.57 BEP Sales (Fixed Costs / P/V Ratio) 32,456.00

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