Question

Capial employed by a partnership firm is Rs.5,00,000. Its average profit is Rs. 60,000. The normal rate of return in similar type of business is `10%.` What is the amount of super rofits?

Answer 1

Answer:

10,000

Explanation:

NORMAL PROFITS= CAPITAL EMPLOYED*RATE OF RETURN/100

= 5,00,000*10/100=Rs.50,000

SUPER PROFIT= AVERAGE PROFIT-NORMAL PROFIT

= 60,000-50,000=Rs.10,000

Answer 2

The amount of Super Profit is Rs. 10,000.

Explanation:

Given :

• Capital Employed = Rs. 5,00,000
• Average Profit = Rs. 60,000
• Normal Rate of Return = 10%

To find :

• The amount of Super Profit

Solution :

★ Super Profit = Average Profit - Normal Profit

★ Normal Profit = Capital Employed × (Normal Rate of Return/100)

Solution :

• Normal Profit = Capital Employed × (Normal Rate of Return/100)

= 5,00,000 × (10/100)

= 50,000

Normal Profit = Rs 50,000

★ Super Profit = Average Profit - Normal Profit

Average Profit = Rs. 60,000

= 60,000 - 50,000

= 10,000

Super Profit = Rs. 10,000

Therefore, the amount of Super Profit is Rs. 10,000.