Question

Different between Average profit and super profit

Answer 1

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Average profit - - It means ratio between sum of all year profits and number of years.

Calculation - -A. P = sum of all profits of years. / no. of years.

Normal profit - - Normal profit needs not to be calculated in Calculation of average profit.


Super profit - - It means deduction of normal profit from average profit..

Calculation - - S. P = A. P - N. P

N. P = capital employed * rate /100

S.P = super profit

N. P= normal profit..

There is a need of Calculation of normal profit under super profit Calculation.....

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