How to Calculate a Margin in BTS MCO

Welcome to this article dedicated to exercises on business calculations. Here you will find no less than 10 management exercises on business calculations for Operational Management. At the end of this article, you will know how to calculate a margin without any worries.

How to calculate a margin: company “LuminoTech”

States :

The company "LuminoTech", specializing in the sale of lighting products, has recently acquired a new range of LED lamps. The purchase price excluding tax (PA HT) of each lamp is €20 and the company plans to sell them at €30 excluding tax.

Work to do :

1. Calculate the unit margin on the sale of each lamp.
2. Suppose “LuminoTech” plans to sell 1000 lamps this month. What would be their overall margin?
3. Calculate the margin rate.
4. Estimate the markup rate.
5. If we consider a VAT rate of 20%, what would be the sales price including VAT?

Proposed correction:

1. The unit margin is calculated by subtracting the purchase price excluding tax from the sale price excluding tax. Here, this gives: €30 (PV excluding tax) – €20 (PA excluding tax) = €10.

2. The overall margin is calculated by multiplying the unit margin by the quantity sold, i.e.: €10 * 1000 = €10.000.

3. The margin rate is obtained by dividing the margin by the net PA and multiplying the result by 100. Thus, we obtain: ((€30 – €20) / €20) * 100 = 50%.

4. The markup rate is calculated using the following formula: ((€30 – €20) / €30) * 100 = 33,33%.

5. The sales price including all taxes is calculated by adding the VAT amount to the price excluding tax (PV excluding tax * VAT rate). Here, this gives: €30 + (€30 * 20%) = €36.

How to Calculate a Margin : Delicious Bakery

States :

Our company, Delicious Bakery, is known for its quality, artisanal pastries. In order to strengthen our perception of our financial performance, we need to analyze one of our best-selling products, a dessert called “Chocolate Heaven.” The financial details of this product are shown below:

– Purchase price excluding tax (PA HT): €6,00.
– Sales price excluding tax (PV HT): €12,00.
– Quantity sold: 400 units.

Work to do :

1. Calculate the unit margin of 'Chocolate Heaven'.

2. Calculate the overall margin of 'Chocolate Heaven'.

3. Calculate the margin rate of 'Chocolate Heaven'.

4. Calculate the markup rate of 'Chocolate Heaven'.

5. How much profit does Delicious Bakery make for each “Chocolate Heaven” sold?

Proposed correction:

1. Unit margin = PV HT – PA HT. Therefore, Unit margin = €12,00 – €6,00 ​​= €6,00.

2. Overall margin = Unit margin * Quantity sold. Therefore, Overall margin = €6,00 ​​* €400 = €2400.

3. Margin rate = ((PV HT – PA HT) / PA HT) * 100. Therefore, Margin rate = ((12 € – 6 €) / 6 €) * 100 = 100%.

4. Markup rate = ((PV HT – PA HT) / PV HT) * 100. Therefore, Markup rate = ((12 € – 6 €) / 12 €) * 100 = 50%.

5. The profit that Delicious Bakery makes for each “Chocolate Heaven” sold is the unit margin, which is €6,00.

Calculate a Margin: “UgoTech”

States :

You are the CFO of the company "UgoTech", a technology company specializing in the sale of smartphones. You have recently launched a new smartphone, whose purchase price excluding taxes (PA HT) is €250 for each unit. The company managed to sell 500 units during the first month of launch. The sales price excluding taxes (PV HT) set by your company is €400 for each smartphone.

Work to do :

1. Calculate the overall margin in euros on the sale of smartphones.
2. Calculate the margin rate as a percentage.
3. Calculate the markup rate as a percentage.
4. What would the overall margin be if the quantity sold doubled while maintaining the same sales price excluding tax (SVP HT)?
5. If the company wanted to maintain the same margin rate, but with a purchase price excluding tax (PA HT) increased by 10%, what would change? What should be the new sales price excluding tax (PV HT)?

Proposed correction:

1. The overall margin is calculated using the formula: Unit margin * quantity sold. Here, the unit margin is: (PV HT – PA HT) = (400 – 250) = 150€. Therefore, the overall margin is: (150 * 500) = 75€.

2. The margin rate is calculated using the formula: ((PV HT – PA HT) / PA HT) * 100). Here, the margin rate is: ((400 – 250) / 250) * 100) = 60%.

3. The markup rate is calculated using the formula: ((PV HT – PA HT) / PV HT) * 100). Here, the markup rate is: ((400 – 250) / 400) * 100) = 37.5%.

4. If the quantity sold doubled while maintaining the same sales price excluding tax (PV HT), the overall margin would be: (Unit margin * new quantity sold) = (150 * (500*2)) = €150.

5. If the purchase price excluding tax (PP HT) increased by 10%, the new PP HT would be: (250 * 110%) = €275. To maintain the same margin rate, the new sales price excluding tax (SVP HT) should be: (MARGIN RATE * PP HT + PP HT) = ((60/100) * 275 + 275) = €440.

How to Calculate a Margin : Tech Paradise

States :

The company "Tech Paradise" specializes in the sale of computer equipment and accessories. It purchased €100 worth of merchandise, including 000% ​​VAT. The company manager set a unit margin rate of 20% on each computer product sold.

The company sold €500 worth of merchandise (including VAT) during the first six months of its financial year.

Work to do :

1. What is the purchase price excluding tax (PA HT) of the goods purchased by the company?
2. How many units did the company “Tech Paradise” sell?
3. What is the unit sales price excluding tax (PV HT) of each IT product?
4. What is the margin rate on each computer product sold by the company?
5. What is the company's overall margin during the first six months of its fiscal year?

Proposed correction:

1. The purchase price excluding tax (PA HT) of the goods is calculated by subtracting the VAT from the purchase price including tax. We have
€100 / (000 + 1%) = €20.

2. To know how many units the company "Tech Paradise" has sold, we must calculate the ratio between the turnover (TO) and the selling price excluding tax (PV HT). We have neither one nor the other at the moment.

3. The unit sales price excluding tax (PV HT) is calculated by adding the unit margin to the unit purchase price excluding tax. We have €83333,33 * (1+35%) = €112500.

4. The margin rate on each computer product sold by the company is already given by the manager of the company, which is 35%.

5. The company's overall margin during the first six months of its fiscal year is calculated by multiplying the unit margin by the quantity sold. For this, we need the margin rate of 35% and the turnover excluding tax (€500 / (000+1%)) or €20 and the number of units sold is €416666,67 / €416666,67 = 112500. So, the overall margin is 3,7 * (€3,7 – €112500) = €83333,33.

How to Calculate a Margin: SportMaster Company

States :

SportMaster Company specializes in the online sale of sports equipment and goods. It buys well-known brands at wholesale prices and resells them to consumers via its website.

Here is some information for the last quarter:

– The purchase price excluding tax (PA HT) of a pair of Nike running shoes is €65.
– SportMaster Company applies a margin rate of 45% on all its products.
– During the last quarter, the company sold 850 pairs of these shoes.
– The VAT rate is 20%.

Work to do :

1. Calculate the sales price excluding tax (SRP HT) of the pair of shoes.
2. Calculate the sales price all taxes included (PV including tax).
3. Calculate the unit margin made on each pair of shoes.
4. Calculate the overall margin made on the sale of these shoes this quarter.
5. Calculate the markup rate of the pair of shoes.

Proposed correction:

1. The PV HT is calculated by adding the margin rate to the PA HT. It is calculated as follows: PV HT = PA HT + (PA HT * Margin rate / 100) = €65 + (€65 * 45% / 100) = €94,25

2. To calculate the PV including tax, we add the VAT to the PV excluding tax. This calculation is done as follows: PV including tax = PV excluding tax + (PV excluding tax * VAT / 100) = €94,25 + (€94,25 * 20% / 100) = €113,10.

3. The unit margin is calculated by subtracting the purchase price excluding tax from the sale price excluding tax. Unit margin = PV excluding tax – PA excluding tax = €94,25 – €65 = €29,25.

4. The overall margin is obtained by multiplying the unit margin by the quantity of shoes sold during the quarter. Overall margin = Unit margin * quantity sold = €29,25 * 850 = €24,862.50.

5. The markup rate is calculated by dividing the unit margin by the selling price excluding tax and multiplying the result by 100. Markup rate = (Unit margin / excluding tax sales price) * 100 = (€29,25 / €94,25) * 100 = 31,01%.

This financial analysis provides a detailed overview of the profitability of the sale of Nike running shoes by SportMaster Company during the last quarter.

How to Calculate a Margin: The Chocolate Factory

States :

Chocolaterie Douceur is a company specializing in the manufacture of different types of chocolates. It buys a kilo of cocoa at €25 excluding VAT and resells it in the form of chocolates for a sale price of €50 excluding VAT. The VAT applicable on these products is 20%.

Work to do :

1. What is the purchase price excluding tax per kilo of cocoa?
2. What is the selling price excluding tax per kilo of chocolate produced?
3. Calculate the unit margin for one kilo of chocolates sold.
4. What is the margin rate?
5. What is the markup rate?

Proposed correction:

1. The purchase price excluding tax per kilo of cocoa is €25.

2. The selling price excluding tax per kilo of chocolates produced is €50.

3. The unit margin for a kilo of chocolates sold is calculated by subtracting the pre-tax purchase price from the pre-tax sale price, i.e.: (50 – 25 = €25).

4. The margin rate is calculated by dividing the unit margin by the purchase price excluding VAT and then multiplying the result by 100. Therefore, the margin rate is ((25 / 25) * 100) = 100%.

5. The markup rate is calculated by dividing the unit margin by the selling price excluding tax and then multiplying the result by 100. Therefore, the markup rate is ((25 / 50) * 100) = 50%.

How to Calculate a Margin: The Agile Mountain

States :

The sports shop "La Montagne Agile" is selling a set of camping equipment. The purchase cost of each set is €120 excluding VAT and the set is sold for €180 excluding VAT. The VAT rate applied is 20%. In addition, "La Montagne Agile" sold 100 sets of camping equipment this month.

Work to do :

1. What is the total purchase price excluding VAT of the lots?
2. What is the total selling price excluding tax of the lots?
3. Calculate the unit margin for each lot sold (in €).
4. Calculate the overall margin for the month (in €).
5. Calculate the margin rate for these lots (in %).

Proposed correction:

1. The total purchase price excluding VAT of the lots is: €120 * 100 = €12.

2. The total selling price excluding tax of the lots is: €180 * 100 = €18.

3. The unit margin for each lot sold is: €180 – €120 = €60.

4. The overall margin for the month is: €60 * 100 = €6.

5. The margin rate for these lots is: ((€180 – €120) / €120) * 100 = 50%.

How to calculate a margin: BellePlante

States :

The company BellePlante, which specializes in the sale of exotic plants and flowers, has recently purchased a new batch of rare plants. The company's management wants to make the plants attractive while ensuring a satisfactory margin. The following data is provided:

– Purchase price excluding tax (PA HT): €500 per plant

– Acquisition costs: €3000 for the lot

– Batch size: 100 plants

– VAT rate: 20%

Work to do :

1. Calculate the total cost of the plant lot.
2. Calculate the Unit Purchase Price excluding Tax (PAU HT) per plant.
3. If the company wants to achieve a margin of 20%, what is the selling price excluding tax (PV HT) of each plant?
4. Calculate the sales price including all taxes (PV TTC) by applying the VAT rate of 20%.
5. Calculate margin rate and brand rate.

Proposed correction:

1. The total cost of the batch of plants is the sum of the purchase price of the plants and the acquisition costs, i.e. €500 * 100 + €3000 = €53.

2. The PAU HT corresponds to the total cost of the lot divided by the number of plants, i.e. €53 / 000 = €100.

3. To achieve a margin of 20%, the PV excluding tax of each plant must be: PAU excluding tax * (1 + margin%), i.e. €530 * (1 + 20/100) = €636.

4. The PV including tax is obtained by applying the VAT rate to the PV excluding tax: i.e. €636 + (€636 * 20/100) = €763.2.

5. The margin rate is calculated as follows: Margin rate = ((PV HT – PA HT) / PA HT) * 100, or ((€636 – €500) / €500) * 100 = 27.2%. The markup rate is calculated as follows: Markup rate = ((PV HT – PA HT) / PV HT) * 100, or ((€636 – €500) / €636) * 100 = 21.38%.

How to Calculate a Margin: Tech Wave

States :

Tech Wave, a company specializing in the sale of computer equipment, has decided to introduce a new product: a high-definition computer monitor. The following information is provided:

– Cost of purchasing the screen excluding tax: €125.
– Shipping costs: €5 per unit.
– Marketing costs: €10 per unit.
– Estimated sales volume: 5000 units per year.
– The sales price recommended by the sales director is €250 excluding VAT.

The applicable VAT rate is 20%.

Work to do :

1. Calculate the total purchase cost excluding VAT of each screen unit.
2. Determine the unit selling price excluding VAT of the screen.
3. Calculate the unit and overall gross margin.
4. Determine the margin rate.
5. What would be the maximum purchase price excluding tax so that the overall margin is €500,000?

Proposed correction:

1. The total purchase cost excluding tax of each screen unit: €125 + €5 + €10 = €140.

2. The unit selling price excluding tax of the screen is set by the sales manager at €250.

3.
Gross unit margin = Unit selling price excluding tax – Unit purchase cost excluding tax = €250 – €140 = €110.
Overall gross margin = Unit gross margin * Sales volume = €110 * 5000 = €550,000.

4. Margin rate = ((PV HT – PA HT) / PA HT) * 100 = ((250 – 140) / 140)* 100 = 78.57%.

5.
If the desired overall margin is €500,000 and the estimated sales volume is 5000 units, then the unit margin should be €500,000 / 5000 = €100.
Thus, the maximum purchase price excluding tax for the company would be: Selling price excluding tax – Unit margin = €250 – €100 = €150.

How to Calculate a Margin : TechnoWorld

States :

TechnoWorld, a company specializing in e-commerce, purchases digital tablets from a supplier to resell them on its website. The purchase price excluding tax (PA HT) of the tablets is €200 per unit.

In order to make a profit, TechnoWorld adds a margin on each tablet before reselling it. TechnoWorld resells each tablet at a sales price excluding tax (SRP) of €275.

The VAT information is as follows: standard rate of 20%.

Work to do :

1. Calculate the unit margin made by TechnoWorld on each tablet sold.
2. What is the margin rate achieved by TechnoWorld?
3. What is TechnoWorld's markup rate?
4. How many tablets does TechnoWorld need to sell to achieve an overall margin of €15?
5. What would be the new margin rate if TechnoWorld decided to increase the selling price excluding tax of each tablet to €300?

Proposed correction:

1. The unit margin is calculated by subtracting the purchase price excluding tax (PA HT) from the sale price excluding tax (PV HT). Here, the unit margin is €275 – €200 = €75.

2. The margin rate is equal to the unit margin divided by the net PA, all multiplied by 100. That is (€75 / €200) * 100 = 37,5%.

3. The markup rate is equal to the unit margin divided by the PV excluding tax, multiplied by 100. That is (€75 / €275) * 100 = 27,27%.

4. To obtain an overall margin of €15, TechnoWorld must sell €000 / €15 = 000 tablets.

5. If TechnoWorld increased the selling price excluding VAT of each tablet to €300, the unit margin would become €300 – €200 = €100. The new margin rate would therefore be (€100 / €200) * 100 = 50%.

If you would like to practice with other corrected management exercises on commercial calculations, do not hesitate to visit my article entitled Commercial Calculations: 13 Corrected Exercises – Operational Management.