Choosing customers. 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.

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Taylor Corporation $120,000 Kelly Corporation Total Revenues Variable costs Contribution margin Fixed costs (allocated) Operating income Machine-hours required S80,000 $200,000 42,000 78,000 48,000 32,000 110,000 40,000 $18,000) 100,000 $ 10,000 $ 18,000 1,500 hours 500 hours 2,000 hours