Caiculator Segment analysis for a service company Charies Schwab Corporation is

Question

Caiculator Segment analysis for a service company Charies Schwab Corporation is one of the more innovative foliows (in milions): brokerage and Snancial service companies in United States. The company recenty provided information about its major business segments as Investor Advisor Services Services $4,647 %1,360 Income from operations 1,673 a. The Invester Services segment serves the retal customer you and me. These are the brokerags. Intemet, and mutual hund services used by inavidua investors. The Advileor Services ?) s inclides the same servees povided for finencial istittiors. sich as banka, mutaal hnd managers, insurance companies, and pension plan sonunstston. b. Indicate whether the following costs are a"Vanable Cost" or a "Fixed Cost" in the "Investor Services'segment 1. Cammissions to brokers. Variable Cost 2 Fees paid to exchanges for executing trades. Varlable Cost 3 Depreciation on brokerege offices Fixed Cost 4 Transaction fees incurred by Schwab mutual funds to purchase and sefl shares. Variable Cost v 5. Property taxes on brokerage offfices. Fixed Cost 6 Depreciation on brokerage office equipment, such as computers and computer networks Fixed Cost 7 Advertising Varlable Cost Previous Next saved WPX

Explanation / Answer

Req C: Contribution margin (Net Income+ Fixed Cost) Investor Advisor Net operating icnome 1,673 459 Depreciation (Fixed cost) 154 45 Contribution margin 1,827 504 . Req D: When fixed asset wowuld not be sold, that means there is no savings in Fixed cost on closing the operation f Advisor services, then there will be loss of contribution. Hence, the operating income will decline by $ 504 When fixed assets were sold, there will be savings in fixed cost. In such cases, there will be a loss of net income only. Hence, the operating income will decrease by $ 459

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---