Differential Analysis Report for a Discontinued Product The condensed product-line income statement for Suffolk China Ware Company is as follows: SUFFOLK CHINA WARE COMPANY Product-Line Income Statement Light Medium Dark Roast Roast Roast Sales $645,000 $890,000 $260,000 Cost of goods sold (254,000) (326,000) (158,000) Gross profit $391,000 $564,000 $102,000 Selling and administrative expenses (284,000) (346,000) (158,000) Operating income (loss) $107,000 $218,000 $ (56,000) Fixed costs are 39% of the cost of goods sold and 15% of the selling and administrative expenses. Suffolk China Ware assumes that fixed costs would not be significantly affected if the Dark Roast line were discontinued. a. Prepare a differential analysis report for all three products. SUFFOLK CHINA WARE COMPANY Product-Line Income Statement Differential Analysis Report Light Medium Dark Roast Roast Roast Differential revenue from monthly sales: Revenue from sales Differential cost of monthly sales: variable cost of goods sold Variable selling and administrative expenses Total differential costs Monthly differential income from salesSegment Analysis The Charles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in the United States. The company provided information about its major business segments as follows (in millions) for a recent year. Investor (Retail) Advisor Services Services Revenues $4,648 $2,691 Operating income before taxes 1,004 548 Depreciation and amortization 114 55 a. How do you believe Schwab defines the difference between the segments? The "Investor (Retail) Services" segment serves the retail customer and the "Advisor Services" segment includes services for corporate or pension funds. b. All of the following would be considered to be variable costs in the "Investor (Retail) Services" segment except: Depreciation on brokerage offices. c. Estimate the contribution margin for each segment assuming that depreciation and amortization are the only fixed assets incurred. Investor (Retail) Advisor Services Services Operating income before taxes Plus depreciation and amortization Estimated contribution margin d. If Schwab decided to sell its "advisory services" accounts to another company, estimate how much operating income would decline. Assume that the fixed costs that serve advisory services (computers, servers, and facilities) would not be sold but would be used by the other sector. $ million