Question

A cell phone company has a fixed cost of $1,000,000 per month and a variable cost of $20 per month per subscriber. The company charges $29.95 per month to its cell phone customers. (2) a. What is the breakeven point for this company?

Answer 1

Answer:

100503

Step-by-step explanation:

Data provided in the question:

Fixed cost per month for the cell phone company = $1,000,000

Variable cost  per month per subscriber = $20

Charges for the customer per month = $29.95

Now,

the breakeven point is calculated as:

Breakeven point = $\frac{\textup{Total fixed cost}}{\textup{Charges - variabel cost}}$

on substituting the respective values, we get

Breakeven point = $\frac{\textup{1,000,000}}{\textup{29.95 - 20}}$

or

Breakeven point = 100502.51 ≈ 100503