Jones Products manufactures and sells to wholesalers approximately 500,000 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	$	640,000
Direct labor		160,000
Overhead		480,000
Selling expenses		200,000
Administrative expenses		133,000
Total costs and expenses	$	1,613,000

A new wholesaler has offered to buy 83,000 packages for $3.42 each. These markers would be marketed under the wholesalers 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.

20% of the normal annual overhead costs are fixed at any production level from 450,000 to 600,000 units. The remaining 80% 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.