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.

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 assuming that depreciation and amortization are the only fixed costs incurred.
d. If Schwab decided to sell its “advisory services” accounts to another company, estimate how much operating income would decline.

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Investor (Retail) Advisor Services Services Revenues $6,200 $2,418 Operating income before taxes 2,475 1,175 Depreciation and amortization 203 66