if average capital employed in a firm is rs 5,00,000, actual profit is rs 70,000 and normal rate of return is 10%, then super profit is:
Answers
Answer:
Super Profit = ₹20,000
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
Explanation:
Capital Employed in a firm is Rs 5,00,000
Actual profit is rs 70,000
Normal Rate of Return is 10%
Super Profit = ??
Solution :
Super Profit = Average Profit - Normal Profit
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
= 70,000 - 50,000
= 20,000
Super Profit = Rs.20,000
Therefore, Super Profit is Rs. 20,000