Segment analysis for a service companyCharles Schwab Corporation (SCHW) 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): InvestorServicesAdvisorServicesRevenues$5,411 $2,067 Operating income2,031 962 Depreciation180 54 a. The Investor Services segment serves the retail customer, you and me. These are the brokerage, Internet, and mutual fund services used by individual Investors. The Advisor Services 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 Variable Cost 2. Fees paid to exchanges for executing trades Variable Cost 3. Depreciation on brokerage offices Fixed Cost 4. Transaction fees incurred by Schwab mutual funds to purchase and sell shares Variable Cost 5. Property taxes on brokerage offices Fixed Cost 6. Depreciation on brokerage office equipment, such as computers and computer networks Fixed Cost 7. Advertising Variable Cost 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.Assume the fixed costs that serve Advisor investors would not be sold but would be used by the other sector: _________Assume the fixed assets were “sold”: _________ Chapter 25еBooka. The Investor Services vsegment serves the retail customer, you and me. These are the brokerage, Internet, and mutual fund services used by individual Investors. TheAdvisor Services v 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 Variable Cost v2. Fees paid to exchanges for executing trades Variable Cost v3. Depreciation on brokerage offices Fixed Cost v4. Transaction fees incurred by Schwab mutual funds to purchase and sell shares Variable Cost v5. Property taxes on brokerage offices Fixed Cost v6. Depreciation on brokerage office equipment, such as computers and computer networks Fixed Cost v7. Advertising Variable Cost vc. Estimate the contribution margin for each segment, assuming depreciation represents the majority of fixed costs.Investor ServicesAdvisor Services(in millions)(in millions)Estimated contribution margin2,211 V1,016 Vd. 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: $millionAssume the fixed assets were "sold": $millionFeedbackCheck My WorkPreviousNext Chapter 25еВookSegment analysis for a service companyCharles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its majorbusiness segments as follows (in millions):InvestorAdvisorServicesServicesRevenues$5,411$2,067Operating income2,031962Depreciation18054a. The Investor Services v segment serves the retail customer, you and me. These are the brokerage, Internet, and mutual fund services used by individual Investors. TheAdvisor Services v 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 Variable Cost v2. Fees paid to exchanges for executing trades Variable Cost v3. Depreciation on brokerage offices Fixed Cost v4. Transaction fees incurred by Schwab mutual funds to purchase and sell shares Variable Cost v5. Property taxes on brokerage offices Fixed Cost v6. Depreciation on brokerage office equipment, such as computers and computer networks Fixed Cost v7. Advertising Variable Cost vc. Estimate the contribution marain for each seament. assumina depreciation represents the maiority of fixed costs.Check My WorkPreviousNext

Hi student Since there are multiple subparts, we will answer only first three subparts. If you want…

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 recently provided information about its major business segments as follows (in millions): Investor Services Advisor Services Revenues $5,411 $2,067 Operating income 2,031 962 Depreciation 180 54 a. The Investor Services segment serves the retail customer, you and me. These are the brokerage, Internet, and mutual fund services used by individual Investors. The Advisor Services 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 Variable Cost 2. Fees paid to exchanges for executing trades Variable Cost 3. Depreciation on brokerage offices Fixed Cost 4. Transaction fees incurred by Schwab mutual funds to purchase and sell shares Variable Cost 5. Property taxes on brokerage offices Fixed Cost 6. Depreciation on brokerage office equipment, such as computers and computer networks Fixed Cost 7. Advertising Variable Cost 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

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.4E

See similar textbooks

Related questions

Question

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 recently provided information about its major business segments as follows (in millions):

	Investor Services	Advisor Services
Revenues	$5,411		$2,067
Operating income	2,031		962
Depreciation	180		54

a. The Investor Services segment serves the retail customer, you and me. These are the brokerage, Internet, and mutual fund services used by individual Investors. The Advisor Services 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 Variable Cost
2. Fees paid to exchanges for executing trades Variable Cost
3. Depreciation on brokerage offices Fixed Cost
4. Transaction fees incurred by Schwab mutual funds to purchase and sell shares Variable Cost
5. Property taxes on brokerage offices Fixed Cost
6. Depreciation on brokerage office equipment, such as computers and computer networks Fixed Cost
7. Advertising Variable Cost

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.

Assume the fixed costs that serve Advisor investors would not be sold but would be used by the other sector: _________
Assume the fixed assets were “sold”: _________

Chapter 25
еBook
a. The Investor Services v
segment serves the retail customer, you and me. These are the brokerage, Internet, and mutual fund services used by individual Investors. The
Advisor Services v 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 Variable Cost v
2. Fees paid to exchanges for executing trades Variable Cost v
3. Depreciation on brokerage offices Fixed Cost v
4. Transaction fees incurred by Schwab mutual funds to purchase and sell shares Variable Cost v
5. Property taxes on brokerage offices Fixed Cost v
6. Depreciation on brokerage office equipment, such as computers and computer networks Fixed Cost v
7. Advertising Variable Cost v
c. Estimate the contribution margin for each segment, assuming depreciation represents the majority of fixed costs.
Investor Services
Advisor Services
(in millions)
(in millions)
Estimated contribution margin
2,211 V
1,016 V
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: $
million
Assume the fixed assets were "sold": $
million
Feedback
Check My Work
Previous
Next

Chapter 25
еВook
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 recently provided information about its major
business segments as follows (in millions):
Investor
Advisor
Services
Services
Revenues
$5,411
$2,067
Operating income
2,031
962
Depreciation
180
54
a. The Investor Services v segment serves the retail customer, you and me. These are the brokerage, Internet, and mutual fund services used by individual Investors. The
Advisor Services v 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 Variable Cost v
2. Fees paid to exchanges for executing trades Variable Cost v
3. Depreciation on brokerage offices Fixed Cost v
4. Transaction fees incurred by Schwab mutual funds to purchase and sell shares Variable Cost v
5. Property taxes on brokerage offices Fixed Cost v
6. Depreciation on brokerage office equipment, such as computers and computer networks Fixed Cost v
7. Advertising Variable Cost v
c. Estimate the contribution marain for each seament. assumina depreciation represents the maiority of fixed costs.
Check My Work
Previous
Next

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.