Problem 13.43. (Target Pricing) EX Limited is an established supplier of precision parts to a major aircraft manufacturer. It has been offered the choice of making either Part A of Part B for the next perved but not both. Both parts use the same metal, a titanium alloy, of which 13.000 kilos only are available, ar R$ 12.56) per kilo. The parts are made by passing each one through two fully automatic computer controlled machine lines-Sand Twhose capacities are limited. Target prices have been set and the following data are available for the period: Part details Part A Part B Maximum call-off (units) 7.000 9.000 Target price Rs. 145 per unit Rs. 115 per unit Alloy usage 1.6 kilos 1.6 kilos Machine times Line S 0.6 hours 0.25 hours Line T 0.5 hours 0.55 hours Machine details Line S Line T Hours available 4,000 4.500 Variable overhead per machine hour Rs. 80 Rs. 100 You are required : (a) to calculate which part should be made during the next period to maximise contribution: (b) to calculate the contribution which EX Limited will earn and whether the company will be able to meet the maximum call-off. As an alternative to the target prices shown above, the aircraft manufacturer has offered the following Target prices less 10% plus Rs. 60 per hour for each unused machine hour. (c) You are required to decide whether your recommendation in (a) above will be altered and, if so, to calculate the new contribution. alternative arrangement