Question

Find out super profit, if capital employed is ₹ 4,00,000, normal rate of return is 12% and average profit is ₹ 60,000.

Answer 1

Normal profit = Capital employed × Normal rate of return

= 4,00,000 × 12%

= ₹ 48,000

Super profit = Average profit – Normal profit

= 60,000 – 48,000

= ₹ 12,000