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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Break-even analysis for a service company        Â
Sprint Nextel is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 32.5 million direct subscribers (accounts) that generated revenue of $35,345 million. Costs and expenses for the year were as follows (in millions):
Â
                                                                                 
Assume that 70% of the cost of revenue and 30% of the selling, general, and administra- tive 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 assump- tions given? Round units (accounts) and per-account amounts 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?
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