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harles Schwab Corporation is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its
harles 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 | Advisor Services | |
Revenues | $3,219 | $1,514 |
Income from operations | 875 | 523 |
Depreciation | 153 | 53 |
Required: | |
A. | How does a brokerage company like Schwab define the Investor Services and Advisor Services segments? Use the Internet and the Business Connection box in this chapter to develop your answer. |
B. | Provide a specific example of a variable and fixed cost in the Investor Services segment. |
C. | Estimate the contribution margin for each segment, assuming that depreciation represents the majority of fixed costs. |
D. | If Schwab decided to sell its Advisor Services business to another company, estimate how much operating income would decline. |
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