Capital 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%. The amount of super profit is
Answers
Explanation:
Capital employed = Rs. 5,00,000
Normal Profit= Capital employed× Normal Rate of return/100
Normal Profit = 5,00,000 × 10/100
Normal Profit = 50,000
Super Profit = Average Profit- Normal Profit
Super Profit = 60,000 - 50,000
Super Profit =10,000
Hence, The amount of super profit = Rs. 10,000
Answer:
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
★ 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 = 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.