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Estimate the contribution margin for each segment

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Reference no: EM132708122

Problem - Segment analysis - The Charles Schwab Corporation (SCHW) is one of the more innovative brokerage and financial service companies in the United States. The company provided information about its major business segments as follows (in millions) for a recent year.

 

Investor (Retail) Services

Advisor Services

Revenues

$4,771

$1,609

Operating income before taxes

1,681

598

Depreciation and amortization

171

53

Required -

a. How do you believe Schwab defines the difference between the segments?

b. Provide a specific example of a variable and fixed cost in the "Investor (Retail) Services" segment.

c. Estimate the contribution margin for each segment.

d. If Schwab decided to sell its "advisory services" accounts to another company, estimate how much operating income would decline.

Reference no: EM132708122

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