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Segment analysis for a service company Charles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in the United States.

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Segment analysis for a service company Charles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in the United States. The company recentiy provided information about its major business segments as follows (in millions): a. The segment serves the retall customer, you and me. These are the brokerage, Intemet, 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. Indicate whether the following costs are a "Variable Cost" or a "Fixed Cost" In the "Investor Services" segment. 1. Commissions to brokers 2. Fees paid to exchanges for executing tradesi 3. Depreciation on brokerage offices 4. Transaction fees incurred by Schwab mutual funds to purchase and sel shares 5. Property taxes on brokerage offices 6. Depreciation on brokerage office equipment, such as computers and computer networks 7. Advertising institutions, such as banks, mutual fund managers, insurance companies, and pension plan administrators. b. Indicate whether the following costs are a "Variable Cost" or a "Fixed Cost" in the "Investor Services" segment. 1. Commissions to brokers 2. Fees paid to exchanges for executing trades: 3. Depreciation on brokerage offices 4. Transaction fees incurred by Schwab mutual funds to purchase and sell shares 5. Property taxes on brokerage offices 6. Depreciation on brokerage office equipment, such as computers and computer networks 7. Advertising c. Estimate the contribution margin for each segment, assuming depreciation represents the majority of fixed costs. d. If Schwab decided to sell its "Advisor Services" accounts to another company, estimate how much operating income would decline under the following assumptions. Assume the fixed costs that serve Advisor investors would not be sold but would be used by the other sector: s million Assume the fixed assets were "sold": s million

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