Question - Break-even analysis OBJ. 3 Sprint Nextel is one of the largest digital wireless service providers in the United States. In a recent year, it had approximately 33.3 million direct subscribers (accounts) that generated revenue of $32,563 million. Costs and expenses for the year were as follows (in millions):
Cost of revenue $17,492
Selling, general, and administrative expenses 9,418
Depreciation 5,074
Assume that 75% of the cost of revenue and 25% of the selling, general, and administra- tive expenses are variable to the number of direct subscribers (accounts).
1. What is Sprint Nextel's break-even number of accounts, using the data and assump- tions above? Round units (accounts) and per-account amounts to one decimal place.
2. How much revenue per account would be sufficient for Sprint Nextel to break even if the number of accounts remained constant?