Two firms A & Co. and B & Co. sell the same type of product in the same market.

Two firms A & Co. and B & Co. sell the same type of product in the same market. Their budgeted Profit & Loss account (Profit & Loss A/c) for the year that ends on 31 March 1996 is as follows:

A &Co.

B &Co.

Sales

5,00,000

6,00,000

Less:

Variable cost

4,00,000

4,00,000

Fixed cost

30,000

70.000

4 30 000

4 70 000

Net profit

70,000

1,30,000

Required: Calculate at which sales both the firms will earn an equal profit. State which firm is likely to earn greater profit in condition of: Heavy demand for the product. Low demand for the product.