Question

1. If average capital employed in a firm is ₹ 5,00,000, actual profit is ₹ 70,000 and normal rate of
return is 10%, then super profit is

Answer 1

Answer:

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Explanation:

Average Profit = ₹70,000

Capital employed in the business = ₹5,00,000

Normal rate of return = 10%

So, Normal profit = Capital Employed × Nrr/100

= ₹5,00,000 × 10/100

= ₹50,000

So, Super Profit = Average Profit - Normal Profit

= ₹70,000 - ₹50,000

= ₹20,000