A firm has an Average Profit of ₹25,000 and a Capital Employed of ₹2,00,000. The business earns a normal profit of 10%. Calculate its super profit.
Answer & explanation
Correct answer: option 4
The correct answer is option 4- ₹5,000.
Normal profit = Capital employed X Rate of return/100
= 2,00,000 x 10/100
= 20,000
Super profit = Average profit - normal profit
= 25,000 - 20,000
= 5,000