Suppose Wildhorse Jets is a small company that customizes Learjets for wealthy clients. At present, the company's managers are negotiating with three potential customers for next year's sales. The company's accountants summarized cost information for each plane as follows:

Potential Customer(In thousands)Rock

StarCEOSports

FigureTotalAvoidable costsBasic jet plane$870$770$740$2,380Production2101,2506302,090Selling costs11022090420Total avoidable costs$1,190$2,240$1,460$4,890Unavoidable costsProduction$2,820Administration540Total unavoidable costs$3,360

The unavoidable costs are the overhead costs to customize the jets, such as facility costs (rent, amortization, etc.) and equipment-related costs. These costs are primarily fixed. The company has a policy of calculating price by applying a 60% mark-up on cost. Two potential cost-based pricing schemes follow.

(a) Calculate the selling price for each model under both alternatives, A and B.

Alternative A. Under this alternative, unavoidable costs are allocated to the three contracts equally, and a mark-up of 60% is added to total costs.

Alternative B. Under this alternative, unavoidable costs are allocated to each contract based on its proportion of avoidable costs, and then a mark-up of 60% is added to total costs. (Round answers to 0 decimal places, e.g. 125.)