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What is Sprint Nextel break-even number of accounts

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Problem - Break-even analysis - Sprint Nextel is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 36.7 million direct subscribers (accounts) that generated revenue of $35,635 million. Costs and expenses for the year were as follows (in millions):

Cost of revenue $16,746

Selling, general, and administrative expenses 11,355

Depreciation 5,953

Assume that 80% of the cost of revenue and 30% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts).

Required -

a. What is Sprint Nextel's break-even number of accounts, using the data and assumptions above? Round units (accounts) to one decimal place.

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

Reference no: EM132881676

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