Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 14

Segment analysis for a service company
Charles Schwab Corporation is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segment as follows (in millions):

a. How does a brokerage company like Schwab define the "Investor Services" and "Institutional Services" segment Use the internet to develop your answer.
b. Provide it specific example of it variable and fixed cost in the "Investor Services" segment.
c. Estimate the contribution margin for each segment, assuming depreciation represents the majority of fixed costs.
d. If Schwab decided to sell its "Institutional Services" accounts to another company, estimate how much operating income would decline.