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y.cunyagenow.csmplilrn/takeAssignment/takeAssignmentMain.do?takeAssig Questions 2 3.O Exercise 11-16 Algorithmic G Break-Even Analysis 6Demmel Company had 100 customer accounts that generated revenue of $31,300. Costs and expenses for the year were as follows $15,300 0,000 3,400 Cost of revenue Selling, general, and administrative expenses number of customer accounts. Assume that 70% of the cost of revenue and 40% of the selling, general, and administrative expenses are variable to the a. What is Demmel\'s break-even number of accounts, using the customer accounts b. How much revenue per account would be suffichent for Demmel to break even if the number of accounts remained constant? Round to the nearest dollar. per account lcon Key Exercise 11-16 Algorithmic

Solution

a) 84 Customer accounts Working: a. Revenue per unit = $       31,300 / 100 = $             313 b. Variable cost of revenue = $       15,300 x 70% = $       10,710 Variable selling,general and administration expense = $       10,000 x 40% = $         4,000 Total Varible cost $       14,710 ÷ Total number of units 100 Variable cost per unit $       147.10 c. Fixed cost of revenue = $       15,300 x 30% = $         4,590 Fixed selling,general and administration expense = $       10,000 x 60% = $         6,000 Depreciation, amortization and other expense = $         3,400 x 100% $         3,400 total fixed costs $       13,990 d. Contribution Margin per unit = Revenue per unit - Variable cost per unit = $       313.00 - $ 147.10 = $       165.90 e. Break even in units = Fixed costs / Contrbution Margin per unit = $       13,990 / $ 165.90 =                    84 b) $ 264 per account Working: a. Variable costs in break even units =                    84 x $ 147.10 = $       12,405 Fixed costs = $       13,990 Break even sales revenue = $       26,395 ÷ Total number of units 100 Sales revenue per unit $             264