Welcome to this article on exercises on business calculations and more specifically commercial calculations bac pro commerce. You will find here no less than 11 detailed corrected management exercises on commercial calculations for Management.
At the end of this article, you will know how to perform commercial calculations for the professional baccalaureate in commerce without any worries.
In this section:
- Application: Jewelry Dreams
- Application: The Good Baguette
- Application: Fashion Brand One
- Application: TechGuru Company
- Application: Electron'Fix Company
- Application: Sarl Cosma
- Application: Techno-Galaxy Company
- Application: Electronix Company
- Application: Chic & Choc clothing store
- Application: Super Product Company
- Application: Pear Inc.
Application: Jewelry Dreams
States :
Rêves de Bijoux is a small business specializing in the sale of jewelry. They buy a ring for €100 excluding VAT and sell it for €150 excluding VAT. VAT is 20%. The company sold 200 rings this month. This week they are planning to increase the price of the ring by 10% and are also planning a flash sale with a 15% discount on the new price.
Work to do :
1. How much VAT is charged for each ring sold?
2. Calculate the margin made for each ring sold and the overall margin for the month.
3. What are the margin rate and markup rate made on each ring sold?
4. What is the price of the ring after the expected increase?
5. What is the price of the ring during the flash sale?
Proposed correction:
1. The amount of VAT for each ring sold is calculated as: Price excluding VAT x VAT rate = €150 x 20% = €30.
2. The margin made for each ring sold is calculated by: PV HT – PA HT = €150 – €100 = €50. The overall margin for the month is calculated by: Unit margin x quantity = €50 x 200 = €10.
3. The margin rate is calculated by: ((PV HT – PA HT) ÷ PA HT) x 100 = ((150 € – 100 €) ÷ 100 €) x 100 = 50%. The markup rate is calculated by: ((PV HT – PA HT) ÷ PV HT) x 100 = ((150 € – 100 €) ÷ 150 €) x 100 = 33,33%.
4. The price of the ring after the planned increase is calculated by: Initial price excluding VAT + (Initial price excluding VAT x increase rate) = €150 + (€150 x 10%) = €165.
5. The price of the ring during the flash sale is calculated by: Price excluding VAT after increase – (Price excluding VAT after increase x reduction rate) = €165 – (€165 x 15%) = €140,25.
Summary of Formulas Used:
| Item | Formulas |
|---|---|
| VAT rate (20%) | Price including tax = Price excluding tax + (Price excluding tax x VAT rate) |
| Overall margin | Overall margin = Unit margin x quantity sold |
| Margin rate | Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 |
| Brand taxes | Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 |
| Increase | Price after increase = Initial price + (Initial price x Rate of increase) |
| Discount | Price after discount = Initial price – (Initial price x Discount rate) |
Application: The Good Baguette
States :
La Bonne Baguette is a bakery that sells pastries and baguettes. The baker recently bought 100 kg of flour to make his products. He paid €200 excluding VAT for the flour, the VAT rate is 20%. He wants to increase the selling price of the flour by 30%. In addition, he plans to offer a promotion on baguettes for a week, with a 20% discount. He also wants to know his margin and his mark-up rate.
Work to do :
1. What is the purchase price including VAT of the flour?
2. What will be the new selling price excluding VAT after the 30% increase?
3. What would be the selling price of the baguettes with the 20% discount?
4. What is the overall margin made on the sale of flour?
5. What is the margin rate of flour?
Proposed correction:
1. The purchase price including VAT is calculated using the formula VAT including VAT = VAT excluding VAT x (1 + (VAT rate ÷ 100)). That is, €200 x (1 + (20 ÷ 100)) = €240.
2. The new selling price excluding VAT is calculated using the formula PV excluding VAT = PA excluding VAT x (1 + (Increase ÷ 100)). That is €200 x (1 + (30 ÷ 100)) = €260.
3. The sale price with the 20% discount is calculated by the formula PV reduction = PV HT x (1 – (Discount ÷ 100)). That is €260 x (1 – (20 ÷ 100)) = €208.
4. The overall margin is calculated by the formula Overall Margin = Unit Margin x Quantity Sold. In this case, Unit Margin = PV HT – PA HT = €260 – €200 = €60. Therefore Overall Margin = €60 x 100 = €6000.
5. The margin rate is calculated using the formula Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100). That is ((€260 – €200) ÷ €200) x 100 = 30%.
Summary of Formulas Used:
| Concept | Formulas |
|---|---|
| Purchase price including VAT | PA TTC = PA HT x (1 + (VAT rate ÷ 100)) |
| New selling price excluding VAT | PV HT = AP HT x (1 + (Increase ÷ 100)) |
| Sale price with reduction | PV reduction = PV HT x (1 – (Reduction ÷ 100)) |
| Overall margin | Overall Margin = Unit Margin x Quantity Sold |
| Margin rate | Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100) |
Application: Fashion Brand One
States :
Fashion Brand One is a company specializing in women's fashion. They recently launched a new blouse on the market at a purchase price excluding tax of €25. The company decided to sell it at a sale price of €60, excluding tax. VAT is 20%.
Here are some of the company's marketing strategies:
1. They offer a 10% discount on the sale price during sales.
2. The company also plans to increase the selling price of this product by 15% by the end of the year.
Work to do :
1. How much is the VAT on the blouse?
2. What is the sales price including tax of the blouse?
3. What is the margin rate and markup rate for this blouse?
4. What will be the new sales price including VAT of the blouse after the reduction?
5. What will be the new sales price including tax of the blouse after the increase at the end of the year?
Proposed correction:
1. The amount of VAT is calculated by multiplying the sales price excluding VAT by the VAT rate (20%). So here, VAT = €60 x 20% = €12.
2. The sales price including VAT is calculated by adding the VAT amount to the sales price excluding VAT. So here, the sales price including VAT is €60 + €12 = €72.
3. The margin rate is calculated using the formula: ((PV HT – PA HT) ÷ PA HT) x 100. So here, the margin rate is: ((€60 – €25) ÷ €25) x 100 = 140%. The markup rate is calculated using the formula: ((PV HT – PA HT) ÷ PV HT) x 100). So here, the markup rate is: ((€60 – €25) ÷ €60) x 100 = 58,33%.
4. The new sales price including tax after the reduction is calculated by deducting 10% from the PV including tax. So here, the new PV including tax will be: €72 – (€72 x 10%) = €64,8.
5. The new sales price including tax at the end of the year is calculated by adding 15% to the PV including tax. So here, the new PV including tax will be: €72 + (€72 x 15%) = €82,8.
Summary of Formulas Used:
Here is a summary of the formulas used:
| Formulas | Explanation |
|---|---|
| VAT = (PV HT x VAT rate) | Calculation of the VAT amount |
| PV including VAT = PV excluding VAT + VAT | Calculation of the sales price including tax |
| Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 | Calculation of the margin rate |
| Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100) | Calculation of the mark rate |
| New PV including tax after reduction = PV including tax – (PV including tax x reduction rate) | Calculation of the new PV including tax after reduction |
| New PV including tax after increase = PV including tax + (PV including tax x increase rate) | Calculation of the new PV including tax after increase |
Application: TechGuru Company
States :
TechGuru is a company that sells electronic devices. It bought 100 smartphones at a unit price excluding VAT of €300 each. After negotiating a 5% discount, it was able to buy them at a revised price.
TechGuru then sells these smartphones at a retail price excluding tax of €450 per unit, this price includes a margin close to their expectations.
Sales were so good that they decided to increase the selling price of the smartphone by a rate of 10%.
Work to do :
1) What is the Purchase Price excluding VAT of these 100 smartphones after negotiation?
2) What is TechGuru's margin rate?
3) What is TechGuru's markup rate?
4) What is the sales price including tax of each smartphone initially marketed by TechGuru knowing that the VAT rate is 20%?
5) What is the new sales price including tax of the smartphone after the 10% increase?
Proposed correction:
1) Purchase price after discount = Purchase price excluding VAT – (Purchase price excluding VAT x discount rate)
= €30 – (€000 x 30%) = €000
2) Margin rate = (PV HT – PA HT) ÷ PA HT x 100
= (€450 – €285) ÷ €285 x 100 = 57,89%
3) Mark rate = (PV HT – PA HT) ÷ PV HT x 100
= (€450 – €285) ÷ €450 x 100 = 36,67%
4) Selling price including tax = Selling price excluding tax + (Selling price excluding tax x VAT rate)
= €450 + (€450 x 20%) = €540
5) New sales price including tax = Old sales price including tax + (Old sales price including tax x increase rate)
= €540 + (€540 x 10%) = €594
Summary of Formulas Used:
| Concept | Formulas |
|---|---|
| Purchase price after discount | Purchase price excluding VAT – (Purchase price excluding VAT x discount rate) |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Sales price including tax | PV excluding VAT + (PV excluding VAT x VAT rate) |
| New Sales Price including VAT after increase | PV TTC + (PV TTC x Increase rate) |
Application: Electron'Fix Company
States :
The company Electron'Fix, specializing in the sale of electronic devices, receives a batch of 50 Panasonic TX-55FX550E televisions. The Purchase Price excluding tax (PA HT) of an item is €550. It plans to apply a brand rate of 40% and initially offers a Sale Price excluding tax (PV HT) with a VAT of 20%. The manager then decides to launch a promotional offer by reducing the sale price by 15%.
Work to do :
1. Calculate the Sales Price excluding Tax (SPT) initially planned by the company.
2. Calculate the corresponding Sales Price Including All Taxes (PV TTC).
3. Determine the overall margin estimated using this operation.
4. Calculate the new sales price excluding tax after the 15% reduction.
5. Finally, determine the company's margin rate after this discount.
Proposed correction:
1. The markup rate is defined as ((PV HT – PA HT) ÷ PV HT) x 100). Therefore, we have PV HT = PA HT ÷ (1 – (Markup rate ÷100)) = €550 ÷ (1 – (40 ÷100)) = €916,67.
2. The All-Tax-Inclusive Sales Price is calculated by adding VAT to the HT PV. Here, PV including VAT = PV HT x (1 + (VAT rate ÷100)) = €916,67 x (1 + (20 ÷ 100)) = €1.
3. The Overall Margin is estimated as the product of the unit margin by the quantity sold. Unit margin = PV HT – PA HT = €916,67 – €550 = €366,67. Therefore, Overall Margin = Unit margin x quantity sold = €366,67 x 50 = €18.
4. The new Sales Price excluding tax after the 15% reduction is calculated as PV excluding tax after reduction = PV excluding tax x (1 – (Reduction rate ÷ 100)) = €916,67 x (1 – (15 ÷ 100)) = €779,17.
5. The margin rate, after the reduction is ((PV HT after the reduction – PA HT) ÷ PA HT) x 100) = ((779,17 € – 550 €) ÷ 550 €) x 100 = 41,67%.
Summary of Formulas Used:
| Formulas | Meaning |
|---|---|
| PV HT = PA HT ÷ (1 – (Market rate ÷ 100)) | Calculation of the sales price excluding taxes |
| PV including tax = PV excluding tax x (1 + (VAT rate ÷ 100)) | Calculation of the sales price all taxes included |
| Overall Margin = Unit Margin x Quantity Sold | Overall Margin Estimate |
| PV HT after reduction = PV HT x (1 – (Reduction rate ÷ 100)) | Calculation of the sales price excluding tax following a reduction |
| Margin rate = ((PV HT after reduction – PA HT) ÷ PA HT) x 100 | Calculation of the margin rate after a reduction |
| Concept | Formulas |
|---|---|
| VAT | Amount excluding VAT x VAT rate |
| Margin rate | ((Sale Price excluding VAT – Purchase Price excluding VAT) ÷ Purchase Price excluding VAT) x 100) |
| Brand taxes | ((Sale Price excluding VAT – Purchase Price excluding VAT) ÷ Sale Price excluding VAT) x 100) |
| Sale price including VAT | Sale price excluding VAT + VAT |
| Margin | Unit margin x Quantity sold |
| Discount | Discounted Price = Original Price – (Original Price x (Discount Rate ÷ 100)) |
| Increase | Increased Price = Initial Price + (Initial Price x (Increase Rate ÷ 100)) |
Application: Sarl Cosma
States :
The company Sarl Cosma imports cosmetics from abroad and resells them on the domestic market. It recently concluded a deal with a foreign manufacturer for the purchase of a new lipstick at €7 excluding VAT per unit. Sarl Cosma plans to resell the product at €14 excluding VAT. The company expects to sell 200 units each month. The product is subject to 20% VAT.
Work to do :
1. What is the unit margin and the overall margin of Sarl Cosma on this lipstick?
2. Calculate margin rate and brand rate.
3. What will be the selling price including tax of the lipstick?
4. Suppose that Sarl Cosma decides to offer a 5% discount on the sales price including tax. What will the new price be?
5. Suppose the cost of purchasing lipstick increases by 10%. What impact would this have on the unit margin and the overall margin if Sarl Cosma maintains the same margin rate?
Proposed correction:
1. Unit margin = PV HT – PA HT = €14 – €7 = €7.
Overall margin = Unit margin x quantity sold = €7 x 200 = €1400.
2. The margin rate = ((PV HT – PA HT) ÷ PA HT) x 100 = ((14 € – 7 €) ÷ 7 €) x 100 = 100%.
The markup rate = ((PV HT – PA HT) ÷ PV HT) x 100 = ((14 € – 7 €) ÷ 14 €) x 100 = 50%.
3. The sales price including tax = PV excluding tax + VAT = €14 + (€14 x (20 ÷ 100)) = €14 + €2,8 = €16,8.
4. The new price after reduction = Initial price – (Initial price x (Discount rate ÷ 100)) = €16,8 – (€16,8 x (5 ÷ 100)) = €16,8 – €0,84 = €15,96.
5. If the purchase cost increases by 10%, the new purchase cost = Initial price + (Initial price x (Rate of increase ÷ 100)) = €7 + (€7 x (10 ÷ 100)) = €7 + €0,7 = €7,7. To maintain the same margin rate of 100%, the new selling price excluding VAT = Purchase cost + Margin = €7,7 + €7,7 = €15,4. Therefore, the new unit margin would be €7,7 and the new overall margin would be €1540 if 200 units are sold.
Application: Techno-Galaxy Company
States :
The company "Techno-Galaxy", which specializes in the sale of technological equipment, is looking to determine its margins and brand rates. The company provides you with the following information for a particular product, a latest generation smartphone:
– Purchase price excluding tax (PA HT): €680,00
– Sale price including tax (PV including tax): €1
– VAT rate of 20%.
The company has decided to lower its selling price by 15% following customer feedback. It is also considering increasing its purchase price by 10% due to inflation.
Work to do :
1. Calculate the Selling Price excluding VAT (PV excluding VAT) of the smartphone.
2. Determine the unit margin on the product.
3. Calculate the company's margin rate.
4. Calculate the mark rate.
5. What will be the new margin and markup rates following the reduction in the selling price and the increase in the purchase price?
Proposed correction:
1. To calculate the PV HT (Sale Price Excluding Tax), the formula to use is: PV HT = PV TTC ÷ (1+VAT rate). That is: €1 ÷ (020,00+1%) = €20.
2. The unit margin corresponds to the difference between the PV HT and the PA HT. That is: Unit Margin = PV HT – PA HT = €850,00 – €680,00 = €170,00.
3. The margin rate is calculated using the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100. That is: ((€850,00 – €680,00) ÷ €680,00) x 100 = 25%.
4. The markup rate is calculated using the formula: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100. That is: ((€850,00 – €680,00) ÷ €850,00) x 100 = 20%.
5. After the 15% reduction in the sales price, the new PV excluding VAT becomes: €850,00 – (15% x €850,00) = €722,50. The new PA excluding VAT after a 10% increase is: €680,00 + (10% x €680,00) = €748,00. The new margin is therefore: €722,50 – €748,00 = -€25,50 (loss). The margin rate becomes: -€25,50 ÷ €748,00 = -3,4% and the markup rate: -€25,50 ÷ €722,50 = -3,5%.
Summary of Formulas Used:
| Packages | Description |
|---|---|
| PV HT = PV TTC ÷ (1 + VAT rate) | Formula for calculating the sales price excluding tax |
| Unit margin = PV excluding tax – PA excluding tax | Formula for calculating unit margin |
| Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 | Formula for calculating margin rate |
| Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 | Formula to calculate the markup rate |
Application: Electronix Company
States :
The company Electronix located in France, sells electronic products. The purchase price excluding tax (PA HT) for a game console is €200,00. The company applies a gross margin of 60% on the purchase price excluding tax. In addition, as part of a campaign to boost its sales, the company offers a 15% discount on the sales price including tax of this console. Then, for operational cost reasons, the company plans to increase the sales price including tax by 10% after the discount period.
In France, the VAT rate is either 20% or 5,5%.
Work to do :
1. Calculate the gross margin amount and the margin rate.
2. Calculate the tax-free selling price of this game console.
3. Calculate the sales price including VAT of this game console before and after applying the discount.
4. Calculate the new sales price including tax after applying the increase.
5. How does the markup rate vary before and after the reduction, and after the increase?
Proposed correction:
1. The gross margin amount is Margin = (PA HT x margin rate) = (€200,00 x 60/100) = €120,00. The Margin Rate = ((PV HT – PA HT) ÷ PA HT) x 100) = ((€200,00 + €120,00 – €200,00) ÷ €200,00) x 100) = 60%.
2. The sales price excluding tax of this game console is PV excluding tax = PA excluding tax + Margin = €200,00 + €120,00 = €320,00.
3. The sales price including VAT of this game console before the reduction is PV including VAT = PV excluding VAT + (PV excluding VAT x VAT rate / 100) = €320,00 + (€320,00 x 20 / 100) = €384,00. After applying the reduction, the sales price including VAT is Reduction = PV including VAT – (PV including VAT x 15 / 100) = €384,00 – (€384,00 x 15 / 100) = €326,40.
4. The new sales price including tax after applying the increase is Increase = Reduced sales price including tax + (Reduced sales price including tax x 10 / 100) = €326,40 + (€326,40 x 10 / 100) = €359,04.
5. The markup rate before the reduction is Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100) = ((€320,00 – €200,00) ÷ €320,00) x 100) = 37,5%. After the reduction, the markup rate becomes ((€326,40 – €200,00) ÷ €326,40) x 100) = 38,73%. After the increase, the markup rate becomes ((€359,04 – €200,00) ÷ €359,04) x 100) = 44,3%.
Summary of Formulas Used:
- Margin = PA HT x margin rate
- Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
- PV excluding tax = PA excluding tax + Margin
- PV incl. VAT = PV excl. VAT + (PV excl. VAT x VAT rate / 100)
- Reduction = PV incl. tax – (PV incl. tax x reduction rate / 100)
- Increase = Reduced PV incl. tax + (Reduced PV incl. tax x increase rate / 100)
- Markup rate = ((Price including tax – PA excluding tax) ÷ Price including tax) x 100
Application: Chic & Choc clothing store
States :
The clothing store Chic & Choc purchased a batch of 1000 dresses at a purchase price excluding tax (PA HT) of €50 per unit. These dresses were sold at a sale price excluding tax (PV HT) of €75 per unit in normal times. A somewhat quiet summer month prompted the company to offer a 20% discount on each dress sold during that month. Following this, an unexpected increase in its operating costs forced the company to increase the price of its dresses by 10% in normal times. Each dress is subject to 20% VAT.
Work to do :
1. Calculate the unit margin and the overall margin made on these dresses in normal periods.
2. Calculate the margin rate and markup rate on these dresses in normal times.
3. Calculate the new sales price including VAT after the 20% reduction in summer.
4. Calculate the new selling price excluding VAT after the 10% increase on the dress.
5. Calculate the sales price including tax of the dress after the increase and calculate the overall margin obtained after the increase.
Proposed correction:
1. The unit margin is the difference between the selling price excluding tax and the purchasing price excluding tax, i.e. (PV excluding tax – PA excluding tax) = (€75 – €50) = €25. The overall margin is then the Unit Margin x the quantity sold, i.e. 1000 x €25 = €25.
2. The margin rate is given by the formula ((PV HT – PA HT) ÷ PA HT) x 100 = ((75 € – 50 €) ÷ 50 €) x 100 = 50%. The markup rate is calculated as ((PV HT – PA HT) ÷ PV HT) x 100 = ((75 € – 50 €) ÷ 75 €) x 100 = 33,33%.
3. The sales price including VAT after reduction is calculated as (PV excluding VAT – 20% of PV excluding VAT) x (1+VAT rate) = (€75 – 20% of €75) x (1+20%) = €72.
4. The new selling price excluding VAT after the increase is (PV excluding VAT + 10% of PV excluding VAT) = €75 + 10% of €75 = €82,50.
5. The sales price including VAT after the increase is (PV excluding VAT after increase) x (1 + VAT rate) = €82,50 x (1 + 20%) = €99. The overall margin after the increase is (Unit margin after increase) x quantity sold = (€82,50 – €50) x 1000 = €32.
Summary of Formulas Used:
| Formulas | Description |
|---|---|
| Unit margin = PV excluding tax – PA excluding tax | This is the margin on an item, the difference between the selling price excluding tax and the purchase price excluding tax. |
| Overall margin = Unit margin x quantity sold | This is the total margin obtained on all sales. |
| Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 | It allows us to know the profitability of the item compared to the purchase price excluding tax |
| Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 | It allows us to know the profitability of the item compared to the selling price excluding tax |
| PV including tax after reduction = (PV excluding tax – Reduction%) x (1 + VAT rate) | This is the sales price including tax after deducting the reduction offered to the customer. |
| PV HT after increase = PV HT + % increase of PV HT | This is the new selling price excluding VAT after the increase decided |
Application: Super Product Company
States :
The company Super Produit is marketing a new product whose purchase price excluding tax (PA excluding tax) is €100. The product is sold at a sale price excluding tax (PV excluding tax) of €150.
The company markets this product in a country where the VAT rate is 20% and offers periodic discounts of 15% on the product. The increase in raw material results in a 10% increase in the PV excluding VAT.
Work to do :
1. Calculate the PV including tax.
2. Calculate the margin rate.
3. Calculate the mark rate.
4. Calculate the margin for a sale of 250 units.
5. Calculate the VAT-inclusive PV after a 15% reduction.
6. Calculate the new PV including tax after a 10% increase on the PV excluding tax.
Proposed correction:
1. The PV including VAT is obtained by adding the VAT to the PV excluding VAT. With a VAT rate of 20%, the PV including VAT can be calculated as follows: PV including VAT = (1 + VAT rate) x PV excluding VAT = (1 + 0,20) x €150 = €180.
2. The margin rate is calculated using the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100 = ((150 € – 100 €) ÷ 100 €) x 100 = 50%.
3. The markup rate is calculated as follows: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100 = ((150-100) ÷ 150) x 100 = 33,33%.
4. The margin for a sale of 250 units is: Overall margin = Unit margin x quantity sold = (PV HT – PA HT) x quantity = (150€ – 100€) x 250 = 12 €.
5. The PV including tax after a 15% reduction is: PV including tax reduced = PV including tax – (Reduction in % x PV including tax) = €180 – (0,15 x €180) = €153.
6. The new PV including VAT after a 10% increase on the PV excluding VAT is: New PV excluding VAT = PV excluding VAT + (Increase in % x PV excluding VAT) = €150 + (0,10 x €150) = €165 and New PV including VAT = (1 + VAT rate) x New PV excluding VAT = (1 + 0,20) x €165 = €198.
Summary of Formulas Used:
| Concept | Formulas |
|---|---|
| VAT | PV including VAT = (1 + VAT rate) x PV excluding VAT |
| Margin rate | Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 |
| Brand taxes | Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 |
| Margin | Overall margin = Unit margin x quantity sold |
| Discount | Reduced VAT PV = Initial VAT PV – (Reduction in % x Initial VAT PV) |
| Increase | Increased PV TTC = Initial PV TTC + (Increase in % x Initial PV TTC) |
Application: Pear Inc.
States :
Pear Inc. is a global electronics giant, best known for its innovative products. Pear Inc. wants to launch a new product line that is highly anticipated by the market. The company will introduce a latest generation desktop computer, called Pear-Desktop, which will be marketed at a retail price excluding taxes of €2000.
The unit production cost, also excluding taxes, amounts to €1200.
In this context, we have several key pieces of information: the VAT rate is 20%, the discount rate offered when selling old electrical appliances is 10%, Pear-Desktop has a specific margin rate and the company is planning a price increase plan of 5,5% for the following year.
Work to do :
1. Calculate the VAT of the Pear-Desktop computer to obtain its sales price including VAT.
2. Calculate the margin on the Pear-Desktop product.
3. Determine the margin rate for this product.
4. Calculate the markup rate of the Pear-Desktop computer.
5. If a customer trades in an old device and gets a discount, how much should they pay for the Pear-Desktop computer?
6. Calculate the price increase for next year taking into account the 5,5% increase.
Proposed correction:
1. The formula for calculating VAT is: VAT = Price excluding VAT x VAT rate. Here, VAT = €2000 x 20% = €400. The sales price including VAT is therefore €2400.
2. Gross margin is defined as: Gross margin = Selling price excluding VAT – Purchase price excluding VAT. Therefore, Gross margin = €2000 – €1200 = €800.
3. The margin rate is calculated using the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100. Therefore, Margin rate = ((2000 € – 1200 €) ÷ 1200 €) x 100 = 66,67%.
4. The markup rate is calculated as follows: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100. Obviously, Markup rate = ((2000 € – 1200 €) ÷ 2000 €) x 100 = 40%.
5. The sale price after the 10% discount is: Price after discount = Price including tax – (Price including tax x Discount rate). Therefore, Price after discount = €2400 – (€2400 x 10%) = €2160.
6. The selling price with the 5,5% increase is: Price after increase = Price including tax + (Price including tax x Increase rate 5,5%). Therefore, Price after increase = €2400 + (€2400 x 5,5%) = €2532.
Summary of Formulas Used:
| Formulas | Description |
|---|---|
| VAT = Price excluding VAT * VAT rate | Used to calculate VAT |
| Gross margin = Selling price excluding VAT – Purchase price excluding VAT | Allows us to obtain the gross margin |
| Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 | Used to determine the margin rate |
| Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 | Helps determine the markup rate |
| Price after reduction = Price including tax – (Price including tax x Reduction rate) | Calculate the price after the discount |
| Price after increase = Price including tax + (Price including tax x Rate of increase) | Calculate the price after the increase |