Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
12-31. CHOOSING CUSTOMERS. Central Printers operates a printing press with a monthly capacity of 4,000 machine-hours. Central has two main customers. Trent Corporation and Jessica
12-31. CHOOSING CUSTOMERS. Central Printers operates a printing press with a monthly capacity of 4,000 machine-hours. Central has two main customers. Trent Corporation and Jessica Corporation. Data on each customer for January are: Trent Corporation $270,000 150,000 120,000 96,000 $ 24,000 3,000 hours Jessica Corporation $180,000 125,000 55,000 Revenues Variable costs Contribution margin Fixed costs (allocated) Operating income Machine-hours required Total $450,000 275,000 175,000 160,000 $ 15,000 4,000 hours 64,000 S (9,000 1,000 hours Jessica Corporation indicates that it wants Central to do an additional $180,000 worth of printing jobs during February. These jobs are identical to the existing business Central did for Jessica in January in terms of variable costs and machine-hours required. Central anticipates that the business from Trent Corporation in February will be the same as that in January. Central can choose to accept as much of the Trent and Jessica business for February as its capacity allows. Assume that total machine- hours and fixed costs for February will be the same as in January Required What action should Central take to maximize its operating income? Show your calculations. What other factors should Central consider before making a decision
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started