Example of Super Profit Method?
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The super profit method can be explained with the help of the following question.
ABC Ltd has employed Rs.1000000 as the capital and the investors are not very happy when the income obtained from the investment is 30% while the actual profit obtained is Rs. 4,00,000.
In this question, the normal profit is 30% of 1000000 which is 3,00,000 and the actual profit is 4,00,000.
Therefore, the super profit is
Super Profit = Average estimated profit – Normal Profit
= 4,00,000 – 3,00,000
= 1,00,000