Q. 3 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.Required: What action should Broadway take to maximize its operating income? Show your calculations.

Q. 3 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: Taylor Corporation Kelly Corporation Total Revenues $120,000 $80,000 $200,000 Variable costs 42,000 48,000 90,000 Contribution margin 78,000 32,000 110,000 Fixed costs (allocated) 60,000 40,000 100,000 Operating income $ 18,000 $ (8,000) $ 10,000 Machine-hours required 1,500 hours 500 hours 2,000 hours 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. Required: What action should Broadway take to maximize its operating income? Show your calculations. (20)