Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Segment analysis for a service company Winston Sylvester Corporation is one of the more innovative brokerage and financial service companies in United States. The company
Segment analysis for a service company Winston Sylvester Corporation is one of the more innovative brokerage and financial service companies in United States. The company recently provided information about its major business segments as follows (in millions): Investor Advisor Services Services $1,473 Revenues Income from operations $2,900 1,014 178 67 Depreciation 106 a. The segment serves the retall 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. 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. c Estimate the contribution margin for each segment, assuming depreciation represents the majority of fixed costs Investor Services (in millions) Advisor Services (in millions) Estimated contribution margin d. If Schwab decided to sell its Advisor Services" accounts to another company, estimate how much operating Income would decline under the following assumptions, million Assume the fixed costs that serve Advisor Investors would not be sold but would be used by the other sector: 5 Assume the fixed assets were sold": million
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started