3. Analysis of proposed new business. The Saugus Insecticide Company is currently producing and selling 30 000 kilograms of Sta Ded monthly. This volume is 70% of capacity for Sta Ded. A wholesaler outside the Saugus marketing area offers to buy 5 000 kilograms of this product per month on a two-year contract at $1.80 per kilogram, provided the present pinkish color can be changed to green. The product will be marketed under the wholesaler's brand name To change the color, a special mixing machine will need to be purchased at a cost of $3,000, but it will have no value at the end of the two-year contract period. Ingredients to change the color in the finished product will cost $.01 per kilogram Marketing expenses will not be increased if the new business is accepted, but additional ad- ministrative expenses of $150 per month are estimated. No additional cost for supervision or prop- erty tax is contemplated. Additional payroll taxes will be $210 A monthly income statement for the current operations follows: Saugus Insecticide Company Income Statement For Month Ended $72,000 Cost to manufacture 15,000 Factory overhead 6,000 4,000 780 600 810 3,000 210 125 1,250 Supervisory labor . Power ($180 fixed) Supplies. Property tax.. Payroll taxes 49,775 $22,225 Cost of goods produced and sold.... Gross profit $11,000 Administrative expenses4.500 15,500 6,725 Required: Differential cost analysis to show whether the company should accept the proposed new biiness