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Segment analysis for a service company Charles Schwab Corporation (SCHW) is one of the more innovative...

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

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: $ million
Assume the fixed assets were “sold”: $ million

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