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 $28,000. costs and expenses for the year were as follows: cost of revenue $11,200 selling, general, and administrative expenses 8,400 depreciation 3,100 assume that 60% of the cost of revenue and 20% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts). in part (a) and (b), round all interim calculations and final answers to one decimal place. a. what is rotelco's break-even number of accounts, using the data and assumptions above? round to the nearest whole number. accounts b. how much revenue per account would be sufficient for rotelco to break even if the number of accounts remained constant? round to the nearest dollar. $ per account

Instructions are listed below.

Explanation:

Giving the following information:

In a recent year, it had approximately 100 direct subscribers (accounts) that generated revenue of $28,000. Costs and expenses for the year were as follows: Cost of revenue $11,200 Selling, general, and administrative expenses 8,400 Depreciation 3,100 Assume that 60% of the cost of revenue and 20% of the selling, general, and administrative expenses are variable to the number of direct subscribers (accounts).

A)

Break-even point= fixed costs/ contribution margin

Fixed costs= (11,200*0.40) + (8,400*0.80)= 11,200

Unitary variable cost= (11,200*0.60) + (8,400*0.20)= 8400/100= 84

Selling price= 28000/100= 280

Break-even point= 11,200/ (280 - 84)= 57 subscribers

B) Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 11,200/ [(280 - 84)/280]= $16,000

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