P7.48B (LO 5) Sharp Aerospace has a five-year contract to supply North Plane with four specific spare parts for its fleet of airplanes. The following table provides information on selling prices, costs, and the ribution margin cremental analysis erating income and mber of units of each part that the company needs to produce annually according to the contract with North Plane: nt. od A10 A20 bodt A30 A40 $2,400,000 1,875,000 Sales $1.500,000 1,235,000 $450,000 187,000 $875,000 Variable costs 425,000 Contribution margin Production in units $ 525,000 I600 S 265,000 $450,000 $263,000 1,000 250 750 Machine hours/unit 2 04 1.5 3 Fixed overhead costs amount to $820,000 and are allocated based on the number of units produced The company has a maximum annual capacity of 6,000 machine hours. Instructions a. If Sharp Aerospace could manufacture only one of the four parts, which spare part should it pro- duce, based on the contribution margin per limited resource? Explain why. b. Polaris Airline wants to buy 200 units of part A10 at 110% of the price currently paid by North Plane. Assume that for any of the four parts, Sharp Aerospace has to supply North Plane with at least 90% of the number of units specified in the contract. Should Sharp Aerospace accept the order for 200 units of part A10? c. A new technology is available that costs $2.5 million and would increase Sharp Aerospace's annual capacity by 25%. Should the company purchase the new technology? Assume that the technology has an estimated life of four years and that Sharp Aerospace can sell, at the same North Plane, all the units it can produce of any of the four parts. Show all your calculations its of A20 prices paid by