Broadway Printers operates a printing press with a monthly capacity of 2,000 machine-hours. Broadway has two main customers: Taylor Corporation and Kelly Corporation. Data on each customer for January follows:
Kelly Corporation indicates that it wants Broadway to do an additional $80,000 worth of printing jobs during February. These jobs are identical to the existing business Broadway did for Kelly in January in terms of variable costs and machine-hours required. Broadway anticipates that the business from Taylor Corporation in February will be the same as that in January. Broadway can choose to accept as much of the Taylor and Kelly business for February as its capacity allows. Assume that total machine-hours and fixed costs for February will be the same as in January.
What action should Broadway take to maximize its operating income? Show your calculations.

  • CreatedJuly 31, 2015
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