COMMUTER LTT OVERSHOOTS ASSIGNED ALT ON CLBOUT.

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WE WERE CLRED TO CLB TO 10000 FT MSL. WE SET THIS INTO OUR ALT ALERTER (WHICH IS AN OLDER MODEL NOT WIDELY IN USE IN OUR FLEET -- EXTREMELY DIFFICULT TO HEAR ITS ALARM). CAPT WAS TALKING TO OUR COMPANY ON COM 2 WHILE I MONITORED COM 1. HE DID NOT CALL OUT 1000 FT AND 500 FT PRIOR TO LEVEL OFF WHILE HE WAS OFF FREQ. I HAD CONVINCED MYSELF THAT WE WERE CLBING TO OUR FILED ALT OF 17000 FT. I EVEN CALLED '10000 FT; LIGHTS OUT' PER COMPANY PROCS OVER THE INTERCOM. THE CAPT TURNED OFF THE LNDG LIGHTS AT THAT TIME. HAD REACHED APPROX 10700 FT WHEN DULLES DEP TERSELY CALLED AND XMITTED 'YOU WERE CLRED TO 10000 FT.' AT THAT TIME; IN SOMEWHAT OF A PANIC; I CYCLED THE XPONDER THEN REALIZED THAT I WAS IN FACT ABOVE MY ALT AND QUICKLY RETURNED TO 10000 FT. IN THE PAST I HAVE BEEN IN SEVERAL PLANES WHERE THE MODE C WAS INACCURATE. SUBSEQUENT TO THIS ALT EXCURSION; MY CAPT AND I HAVE DISCUSSED HOW IT COULD HAVE BEEN AVOIDED. WE HAVE DETERMINED OURSELVES TO MAKE THE 1000 FT AND 500 FT CALLS EVEN IF WE DELAY OTHER PORTIONS OF OUR WORKLOAD. ALSO; THE TYPE OF ALT ALERTER INSTALLED IN THE AIRPLANE THAT DAY IS ESSENTIALLY INAUDIBLE OVER THE PREVAILING NOISE LEVEL IN THE BAE 3200. MOST OF OUR FLEET HAS A NEWER; LOUDER VERSION.