Valade Company produces two products, J and K. Estimated costs are presented below for a...

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.