Question

Calculate compensation of employees from the following data:

	(₹ in lakh)
(i) Rent	20
(ii) Interest	35
(iii) Profit	65
(iv) Gross domestic product at factor cost	350
(v) Consumption of fixed capital	10
(vi) Mixed income of self-employed	100

Answer 1

To estimate the Compensation of Employees, we apply the formula:

GDP_fc​ = Compensation of Employees + Operating Surplus + Mixed Income

∴ Operating Surplus = Rent + Interest + Profit

Included items (₹ in lakh):

Gross Domestic Product at Factor Cost (GDP at Factor Cost) = ₹ 350

Rent = ₹ 20

Interest = ₹ 35

Profit = ₹ 65

Mixed income of self-employed = ₹ 100

Excluded item (₹ in lakh): 

Consumption of fixed capital = ₹ 10

Formula for compensation of employees:

Compensation of employees = GDP at FC − Operating Surplus − Mixed Income

= 350 − (20 + 35 + 65) − 100

= 350 − 120 − 100

= 350 − 220

= ₹ 130 lakh