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The average profit is ₹1,30,000, capital employed is ₹8,00,000, and the normal rate of return is 10%. What is the super profit?

Answer and explanation

Correct answer: ₹50,000

Normal profit = Capital employed × Normal rate of return = ₹8,00,000 × 10% = ₹80,000. Super profit = Average profit − Normal profit = ₹1,30,000 − ₹80,000 = ₹50,000. Therefore, option A is correct. In exams, calculate normal profit first and subtract it from average profit.

Related tags

Super ProfitNormal ProfitRate Of ReturnGoodwill AccountingReconstitution Admission Of A PartnerAccountancyClass 12 Mcq

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