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 segments as follows (in millions):

	Investor Services	Institutional Services
Revenues	$3,016	$1,523
Income from operations	847	523
Depreciation	133	54

A. How does a brokerage company like Schwab define the Investor Services and Institutional Services segments? Use the Internet to develop your answer.

The segment serves the retail customer, you and me. These are the brokerage, Internet, and mutual fund services used by individual investors. The segment includes the same services provided for financial institutions, such as banks, mutual fund managers, insurance companies, and pension plan administrators

B. Provide a specific example of a variable and fixed cost in the Investor Services segment.

Variable costs in the Investor Services segment include: Check all that apply.

Depreciation on brokerage office equipment, such as computers and computer networks

Depreciation on brokerage offices

Property taxes on brokerage offices

Commissions to brokers

Fees paid to exchanges for executing trades

Transaction fees incurred by Schwab mutual funds to purchase and sell shares

Fixed costs in the Investor Services segment include: Check all that apply.

Depreciation on brokerage office equipment, such as computers and computer networks

Commissions to brokers

Property taxes on brokerage offices

Depreciation on brokerage offices

Fees paid to exchanges for executing trades

Transaction fees incurred by Schwab mutual funds to purchase and sell shares

C. Estimate the contribution margin (in millions) for each segment, assuming depreciation represents the majority of fixed costs.

	Investor Services	Institutional Services
Estimated contribution margin	$_____________	$________________

D. If Schwab decided to sell its Institutional Services accounts to another company, estimate how much operating income would decline (in millions). $___________