Jones Products manufactures and sells to wholesalers approximately 400,000 packages per year of underwater markers at $3.80 per package. Annual costs for the production and sale of this quantity are shown in the table Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses $ 512,000 128,000 384,000 160,000 107,000 $1,291,000 A new wholesaler has offered to buy 67,000 packages for $3.42 each. These markers would be marketed under the wholesaler's name and would not affect Jones Products' sales through its normal channels. A study of the costs of this additional business reveals the following Direct materials costs are 100% variable Per unit direct labor costs for the additional units would be 50% higher than normal because their production would require overtime pay at 1 times the usual labor rate 25% of the normal annual overhead costs are fixed at any production level from 350,000 to 500,000 units. The remaining 75% of the annual overhead cost is variable with volume Accepting the new business would involve no additional selling expenses Accepting the new business would increase administrative expenses by a $5,000 fixed amount