Summary
Application: The Golden Fruits
States :
The company "Les Fruits d'Or", specializing in the distribution of organic products, wishes to analyze its commercial performance for the last month. It sells a set of organic fruits at a sales price excluding tax (PV HT) of €15 per kilo, while the purchase price excluding tax (PA HT) is €9 per kilo. It sold 1200 kilos during the month. The applicable VAT rate is 5,5%.
Work to do :
- Calculate the margin rate that “Les Fruits d'Or” makes on each kilo of fruit sold.
- Determine the total turnover excluding tax achieved.
- Calculate the overall margin generated by the sale of these fruits during the month.
- Evaluate the company's turnover including tax.
- Do you think that "Les Fruits d'Or" should adjust its selling price? Justify your answer.
Proposed correction:
-
The margin rate is calculated using the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Let's substitute the values: ((15 – 9) ÷ 9) x 100 = 66,67%.
The company therefore achieves a margin rate of 66,67% on the sale of each kilo of fruit. -
The total turnover excluding tax is given by: CA excluding tax = PV excluding tax x Quantity sold.
Replacing: 15 x 1200 = €18.
The total turnover excluding tax is €18. -
The overall margin is calculated by the formula: Overall margin = Unit margin x Quantity sold.
We have a unit margin of 15 – 9 = €6.
So, Overall Margin = 6 x 1200 = €7.
The overall margin generated is €7.
-
The turnover including tax is calculated using: Turnover including tax = Turnover excluding tax x (1 + VAT rate).
Substituting, 18 x (000 + 1) = €0,055.
The turnover including tax is therefore €18. -
To determine whether Fruits d'Or should adjust its selling price, it is crucial to consider competition, customer demand, and costs. At first glance, with a margin rate of 66,67%, the company appears well positioned to maximize its margins while offering a competitive price. However, a more in-depth analysis of the market is essential for a final decision.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Overall margin | Unit margin x Quantity sold |
| Turnover including tax | CA excluding VAT x (1 + VAT rate) |
Application: TechGadget
States :
"TechGadget" is an innovative company in the field of technological accessories. Currently, it sells a headset at a unit price of €75 excluding VAT. The purchase cost excluding VAT of these headsets is €50 per unit. Last month, the company sold 800 units. The VAT rate is 20%.
Work to do :
- What is the markup rate for each headset sold by TechGadget?
- Calculate the net sales of TechGadget last month.
- Determine the total margin made by the company on the sale of helmets.
- What is the total amount of VAT collected by TechGadget on the sale?
- In your opinion, what would be the financial implications for TechGadget if it decided to lower the selling price by 5% while maintaining the same sales volume?
Proposed correction:
-
The markup rate is calculated by the formula: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing: ((75 – 50) ÷ 75) x 100 = 33,33%.
The markup rate for each helmet sold is therefore 33,33%. -
The net turnover is given by: net turnover = net sales x quantity sold.
Replacing: 75 x 800 = €60.
The net turnover achieved is €60. -
The total margin is calculated using the formula: Unit margin x Quantity sold.
The unit margin is 75 – 50 = €25.
So, Total Margin = 25 x 800 = €20.
The total margin achieved is €20.
-
The total amount of VAT collected is given by: Total VAT = Net turnover x VAT rate.
Replacing: 60 x 000 = €0,20.
TechGadget collected €12 in VAT. -
A 5% price drop would bring the new PV excluding tax to: 75 – (75 x 0,05) = €71,25.
Maintaining the same sales volume, net turnover = 71,25 x 800 = €57.
The new unit margin would be: 71,25 – 50 = €21,25, or a total margin of €17.
This would negatively affect the margin, reducing it by €3, which could impact overall profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Total margin | Unit margin x Quantity sold |
| Total VAT | CA excluding VAT x VAT rate |
Application: Ethical Fashion
States :
The company "Mode Éthique", specializing in eco-responsible clothing, wants to evaluate its performance for the quarter. It sells linen shirts at a sales price excluding tax of €40. The purchase cost excluding tax for each shirt is €25. During the last quarter, 1500 shirts were sold. The applicable VAT rate is 5,5%.
Work to do :
- Calculate the margin rate achieved by “Ethical Mode” on each shirt.
- What is the quarterly net turnover?
- Calculate the total margin obtained on the sale of these shirts.
- Determine the turnover including tax generated by “Ethical Mode”.
- What would be the impact on the total margin if the purchase price of shirts increased by €2 per unit?
Proposed correction:
-
The margin rate is given by: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting: ((40 – 25) ÷ 25) x 100 = 60%.
Thus, “Mode Éthique” achieves a margin rate of 60% on each shirt. -
The net turnover is calculated as follows: Net turnover = Net sales x Quantity sold.
Using numbers: 40 x 1500 = €60.
The quarterly turnover excluding tax is therefore €60. -
The total margin is determined by: Unit margin x Quantity sold.
With a unit margin of 40 – 25 = €15.
So, Total Margin = 15 x 1500 = €22.
The total margin obtained is €22.
-
For turnover including tax, use the formula: Turnover including tax = Turnover excluding tax x (1 + VAT rate).
Replacing: 60 x 000 = €1,055.
The turnover including tax generated is €63. -
If the purchase cost increased by €2 per unit, the unit margin would become 40 – 27 = €13.
The new total margin would therefore be 13 x 1500 = €19.
This would reduce the total margin by €3, highlighting the sensitivity to increased costs.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Total margin | Unit margin x Quantity sold |
| Turnover including tax | CA excluding VAT x (1 + VAT rate) |
Application: Gourmet Escape
States :
The company "Évasion Gourmet", which is dedicated to the sale of gourmet ready meals, seeks to assess its annual financial situation. It sold its ready meals at a sales price excluding VAT of €30 per unit, with a purchase cost excluding VAT of €20 per dish. The total number of dishes sold this year reached 10. The VAT rate for these products is 000%.
Work to do :
- Determine the markup rate achieved by “Évasion Gourmet” on each dish sold.
- Calculate the annual turnover excluding tax.
- Estimate the total margin obtained over the year.
- What is the annual turnover including tax?
- What financial aspects would need to be taken into account if “Évasion Gourmet” decided to add a new range of dishes with a selling price of €35 and a purchase cost of €28?
Proposed correction:
-
The markup rate is calculated using: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
So: ((30 – 20) ÷ 30) x 100 = 33,33%.
Therefore, the markup rate per dish is 33,33%. -
The net turnover is obtained by the formula: net turnover = net sales x quantity sold.
Hence: 30 x 10 = €000.
The annual turnover excluding tax is €300. -
The total margin is determined by the formula: Unit margin x Quantity sold.
Here, the unit margin is 30 – 20 = 10 €.
So, Total Margin = 10 x 10 = €000.
The total annual margin reaches €100.
-
The annual turnover including tax is calculated: Turnover including tax = Turnover excluding tax x (1 + VAT rate).
Therefore: 300 x 000 = €1,055.
The annual turnover including tax is €316. -
Introducing a new range with a PV excluding VAT of €35 and a PA excluding VAT of €28 suggests a more in-depth analysis of costs, profitability and demand. An assessment of the potential margin and the effects on the existing portfolio should be considered for an informed decision.
Formulas Used:
| Title | Formulas |
|---|---|
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Total margin | Unit margin x Quantity sold |
| Turnover including tax | CA excluding VAT x (1 + VAT rate) |
Application: PureEnergy
States :
"PureÉnergie", a company engaged in the sale of solar equipment, wants to analyze its quarterly results. It sells each solar panel at a sales price excluding tax of €500. The purchase price of a panel is €350 excluding tax. During this quarter, it sold 300 panels. The applicable VAT rate is 20%.
Work to do :
- What is the margin rate obtained for each solar panel sold by PureÉnergie?
- Determine the total turnover excluding tax achieved over the quarter.
- Calculate the total margin generated this quarter.
- How much VAT was collected on solar panel sales?
- Consider the possible financial consequences if PureÉnergie were to lower its selling price to increase its sales to 350 units without changing the purchase price.
Proposed correction:
-
The margin rate is calculated using the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((500 – 350) ÷ 350) x 100 = 42,86%.
The margin rate for each solar panel is therefore 42,86%. -
The net turnover is calculated using the formula: net turnover = net sales x quantity sold.
That is, 500 x 300 = €150.
The total turnover excluding tax for this quarter is €150. -
The total margin is calculated using: Unit margin x Quantity sold.
This gives a unit margin of 500 – 350 = €150.
So, Total Margin = 150 x 300 = €45.
The total margin generated is €45.
-
The VAT collected is determined by: Total VAT = Net turnover x VAT rate.
Therefore, 150 x 000 = €0,20.
PureÉnergie collected €30 in VAT. -
When lowering the selling price, it is essential to determine the new margin and turnover. Let's assume a 10% reduction in the PV excluding VAT.
So, New PV HT = 500 – 50 = 450 €. New turnover = 450 x 350 = 157 €.
The total margin would become: (450 – 350) x 350 = €35.
This approach increases revenue but reduces total margin, hence the importance of assessing the price elasticity of demand.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Total margin | Unit margin x Quantity sold |
| Total VAT | CA excluding VAT x VAT rate |
Application: HabitatDesign
States :
"HabitatDesign" is a luxury interior design company. It sells a set of light fixtures at a retail price excluding VAT of €120 each, with a unit purchase cost excluding VAT of €70. Over the last year, they have sold 2000 sets. The VAT rate applied is 20%.
Work to do :
- Calculate the markup rate of each light fixture sold by HabitatDesign.
- What was the value of the annual net turnover?
- Determine the total margin made on these sales.
- Calculate the total VAT collected by HabitatDesign for the year.
- What are the strategic elements that HabitatDesign should consider if it wants to increase its brand rate?
Proposed correction:
-
The markup rate is calculated by: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Substituting, ((120 – 70) ÷ 120) x 100 = 41,67%.
The mark rate per luminaire is therefore 41,67%. -
The net turnover is calculated by: net turnover = net sales x quantity sold.
So, 120 x 2000 = €240.
The annual turnover excluding tax is €240. -
The total margin is given by: Unit margin x Quantity sold.
We have: 120 – 70 = €50 unit margin.
So, Total Margin = 50 x 2000 = €100.
The total margin achieved is €100.
-
The total VAT collected is given by: Total VAT = Net turnover x VAT rate.
Replacing: 240 x 000 = €0,20.
HabitatDesign collected €48 in VAT. -
To increase its brand rate, HabitatDesign must consider the possibility of reducing purchasing costs or increasing the selling price by justifying the quality or exclusivity of the product, while taking into account the perception of the market and the target clientele.
Formulas Used:
| Title | Formulas |
|---|---|
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Total margin | Unit margin x Quantity sold |
| Total VAT | CA excluding VAT x VAT rate |
Application: Soaps of Yesteryear
States :
"Savons d'Antan" is a craft company that manufactures and sells natural soaps. Their flagship soap is sold at a price excluding VAT of €8 per unit while its purchase price excluding VAT is €3. In the last half-year, Savons d'Antan sold 10 units. The VAT rate for this product is 000%.
Work to do :
- What margin do we make on each soap sold?
- Calculate the net turnover for the last half-year.
- Determine the total margin generated by soap sales.
- How much VAT did Savons d'Antan collect in the last half-year?
- What would be the financial impacts if the company decided to lower the PV excluding tax to €6,50 to increase the volumes sold?
Proposed correction:
-
The margin rate is calculated as follows: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((8 – 3) ÷ 3) x 100 = 166,67%.
The margin rate on each soap is therefore 166,67%. -
The net turnover is given by: net turnover = net sales x quantity sold.
Replacing, 8 x 10 = €000.
The turnover excluding tax for the last half-year amounts to €80. -
The total margin is calculated as follows: Unit margin x Quantity sold.
With a unit margin of 8 – 3 = €5.
Hence, Total Margin = 5 x 10 = €000.
The total margin generated is €50.
-
The VAT collected is calculated as: Total VAT = Net turnover x VAT rate.
This gives: 80 x 000 = €0,055.
Savons d'Antan collected €4 in VAT. -
Lowering the PV excluding tax to €6,50 would imply: CA excluding tax = 6,50 x 10 = €000, and Unit margin = 65 – 000 = €6,50.
Therefore, Total Margin = 3,50 x 10 = €000.
Although revenue is down, the adjustment could increase sales volume, but would require an adjustment to preserve margin sustainability.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Total margin | Unit margin x Quantity sold |
| Total VAT | CA excluding VAT x VAT rate |
Application: Sustainable Furniture
States :
"Durable Furniture" offers furniture made from recycled and environmentally responsible wood. A bench is sold at a sales price excluding tax of €200, for a purchase cost excluding tax of €130. During the last half-year, 600 benches were sold. The VAT rate applied is 20%.
Work to do :
- Calculate the markup rate achieved on each bench sold.
- What is the net turnover for these benches in the last half-year?
- Estimate the total margin generated by these sales.
- Determine the amount of VAT collected by Mobilier Durable.
- What are the challenges that Mobilier Durable could face by increasing the volume sold by 10% without changing the selling price or the purchase cost?
Proposed correction:
-
The markup rate is calculated as follows: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
That is: ((200 – 130) ÷ 200) x 100 = 35%.
Each bench sold achieves a markup rate of 35%. -
The net turnover is calculated as: Net turnover = Net sales x Quantity sold.
Hence CA HT = 200 x 600 = €120.
The turnover excluding tax for these benches amounts to €120. -
The total margin obtained is given by: Unit margin x Quantity sold.
That is, 200 – 130 = €70 unit margin.
So, Total Margin = 70 x 600 = €42.
The total margin generated is €42.
-
The amount of VAT collected is calculated by: Total VAT = Net turnover x VAT rate.
Replacing, 120 x 000 = €0,20.
Mobilier Durable collected €24 in VAT. -
Increasing sales volume by 10% means selling 660 benches. While this increases revenue and overall margin, it may require increasing production capacity, managing additional inventory, and maintaining consistent quality without compromising the brand’s green and sustainable perception.
Formulas Used:
| Title | Formulas |
|---|---|
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Total margin | Unit margin x Quantity sold |
| Total VAT | CA excluding VAT x VAT rate |
Application: EcoGarden
States :
EcoJardin, a specialist in ecological garden design, sells planting kits at a retail price of €50 each, excluding VAT. The purchase cost excluding VAT for these kits is €35. Having sold 1500 kits in the last quarter, the company applies a VAT rate of 5,5%.
Work to do :
- Determine the margin rate on each planting kit sold.
- What is the net turnover achieved by ÉcoJardin?
- Calculate the total margin for the kits sold.
- What is the total VAT collected by EcoJardin?
- What would be the implications for EcoJardin if it opted for a price increase strategy while maintaining current sales volumes?
Proposed correction:
-
The margin rate is calculated by: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((50 – 35) ÷ 35) x 100 = 42,86%.
The margin rate for each kit is therefore 42,86%. -
The net turnover is obtained from: net turnover = net sales x quantity sold.
Hence, 50 x 1500 = €75.
The turnover excluding tax achieved by ÉcoJardin is €75. -
The total margin is calculated using the formula: Unit margin x Quantity sold.
With a unit margin of 50 – 35 = €15.
So, Total Margin = 15 x 1500 = €22.
The total margin is €22.
-
The total VAT collected is determined by: Total VAT = Net turnover x VAT rate.
Substituting, 75 x 000 = €0,055.
EcoJardin collected €4 in VAT. -
Increasing the selling price while maintaining the sales volume could increase the unit margin and, consequently, the total margin. However, EcoJardin would have to ensure that the market accepts this change without any apparent negative impact on demand, which could require in-depth market research and effective communication.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Turnover excluding tax | PV HT x Quantity sold |
| Total margin | Unit margin x Quantity sold |
| Total VAT | CA excluding VAT x VAT rate |