Valade Company produces two products, J and K. Estimated costs are presented below for a year in which 10,000 units of each product are expected to be sold:

An annual profit of $280,000 for the whole company is considered satisfactory The company uses the same profit margin (as a percentage of costs) to arrive at the price for both products.
Required:
a. Calculate normal selling prices for products J and K.
b. Using the prices calculated above, how much profit would result if the sales were 5,000 units of J and 15,000 units of K instead of 10,000 units of each?
c. Comment on the effect of changes in the product mix on total profit when the same profit margin percentage is used.

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Total Product I Product K Direct production cost Overhead cost Selling and administrative cost $700,000 $400,000$300,000 160,000 80,000 280,000 140,000 120,000 60,000