Welcome to this article on exercises on business calculations and more precisely on 11 business calculation exercises for dummies. Here you will find no less than 11 detailed corrected management exercises on commercial calculations for Operational Management.
At the end of this article, you will know how to calculate brand rates, margin rates, sales prices excluding tax or tax without any worries.
In this section:
- Application: Fresh Fruits Company
- Application: Bouti-Elec
- Application: Supermarket The good deal
- Application: La Pâtisserie des Douceurs
- Application: Progitech company
- Application: IDEAL Supermarket
- Application: Business Fashion Store
- Application: The Small Business
- Application: RestoDelice Company
- Application: Boutique “La Mode Sereine”
- Application: The pastry shop of delights
Application: Fresh Fruits Company
States :
The Fresh Fruits Company is a company that sells fruits and vegetables. She buys apples at a purchase price excluding tax (PA excluding tax) of €1,50 per unit and plans to sell these apples at a selling price excluding tax (PV excluding tax) of €2,00 per unit. The quantity sold is 1000 units. The applicable VAT rate is 20%.
Work to do :
1. What is the selling price all taxes included (PV including VAT) of an apple?
2. How much VAT is charged for an apple?
3. What is the unit margin achieved on each apple?
4. What is the margin rate and brand rate?
5. What is the overall margin made on the sale of all the apples?
Proposed correction:
1. The sales price all taxes included (PV including VAT) is calculated by adding VAT (PV excluding VAT x VAT rate) to the PV excluding VAT. Here, the PV including tax = €2,00 x (1 + 20/100 = 1,2) = €2,40.
2. The amount of VAT for an apple is the difference between the PV including VAT and the PV excluding VAT. Here, VAT = €2,40 – €2,00 = €0,40.
3. The unit margin (MU) is calculated by subtracting the purchase price excluding tax from the selling price excluding tax. Here, the MU = PV excluding tax – PA excluding tax = €2,00 – €1,50 = €0,50.
4. The margin rate (Margin Rate) is calculated as follows: (Unit margin ÷ PA excluding tax) x 100). Here, the Margin Rate = (€0,50 ÷ €1,50) x 100 = 33,33%.
The brand rate (Brand Rate) is calculated as follows: ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100). Here, the Brand Rate = ((€2,00 – €1,50) ÷ €2,00) x 100 = 25%.
5. The overall margin (MG) is the unit margin multiplied by the quantity sold, therefore MG = Unit margin x Quantity sold = €0,50 x 1000 = €500.
Summary of Formulas Used:
| Concept | Formulas |
|---|---|
| PV including tax | PV excluding VAT x (1 + VAT rate/100) |
| VAT | PV including VAT – PV excluding VAT |
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Overall margin | Unit margin x Quantity sold |
Application: Bouti-Elec
States :
Bouti-Elec, a company specializing in the sale of household appliances, purchased a batch of washing machines at a unit cost excluding tax of €200. The company applies a margin rate of 30%.
The VAT rate applied to household appliances is 20%.
1,500 washing machines were sold during the year.
Work to do :
1. What is the Sales Price excluding tax (PV excluding VAT) of the washing machine?
2. What is the Sales Price All Taxes Included (PV including VAT) of the washing machine?
3. How much is the VAT for a washing machine?
4. What is the unit margin that the company makes for each sale?
5. What is the amount of the overall margin?
Proposed correction:
1. The PV excluding tax is calculated by adding the margin to the purchase cost excluding tax. So, PV excluding tax = PA excluding tax + Margin = €200 + (€200 x 30/100) = €260.
2. The PV including VAT is calculated by adding VAT to the PV excluding VAT. So, PV including VAT = PV excluding VAT + (PV excluding VAT x VAT rate/100) = €260 + (€260 x 20/100) = €312.
3. The amount of VAT is therefore €312 – €260 = €52.
4. The unit margin is €260 – €200 = €60.
5. The overall margin is the unit margin multiplied by the quantity sold, so €60 x 1,500 = €90,000.
Summary of Formulas Used:
| Formulas | Description |
|---|---|
| PV excluding tax = PA excluding tax + Margin | Sales Price Excluding Taxes |
| PV including VAT = PV excluding VAT + (PV excluding VAT x VAT rate/100) | Sale Price All Taxes Included |
| Unit margin = PV excluding tax – PA excluding tax | Margin for a product |
| Overall margin = Unit margin x quantity sold | Margin for all products sold |
Application: Supermarket The good deal
States :
Supermarket “The Good Deal”, a well-known supermarket chain, recently imported a batch of organic cheese and potato biscuits. The unit purchase cost excluding tax (PA excluding tax) of these biscuits is €1,50.
The supermarket manager has set the unit sales price excluding tax (PV excluding VAT) at €3, the VAT rate is 5,5%. They plan to sell 1000 packs of these cookies.
Work to do :
1. Calculate the unit sales price including tax (PV including tax) of the biscuits.
2. Calculate the VAT amount for each packet of biscuits.
3. Calculate the unit margin.
4. Calculate the overall margin made by selling 1000 packets of biscuits.
5. Calculate the margin rate as well as the brand rate.
Proposed correction:
1. The unit sales price including VAT is calculated as follows: PV including VAT = PV excluding VAT + (PV excluding VAT x VAT rate). That is, €3 + (€3 x 5,5/100) = €3,165
2. The amount of VAT for each packet of biscuits is therefore: PV incl. VAT – PV excl. VAT = €3,165 – €3 = €0,165
3. The unit margin is calculated as follows: Unit margin = PV excluding tax – PA excluding tax = €3 – €1,50 = €1,50
4. The overall margin is obtained by: Overall margin = Unit margin x quantity sold = €1,50 x 1000 = €1500
5. The margin rate is calculated by: Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100) = ((€3 – €1,50) ÷ €1,50) x 100 = 100 % and the brand rate is calculated by: Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100) = ((€3 – €1,50) ÷ €3) x 100 = 50%
Summary of Formulas Used:
| Formulas | Explanation |
| PV including VAT = PV excluding VAT + (PV excluding VAT x VAT rate) | Calculation of the Sales Price including tax |
| VAT = PV including VAT – PV excluding VAT | VAT calculation |
| Unit margin = PV excluding tax – PA excluding tax | Calculation of unit margin |
| Overall margin = Unit margin x quantity sold | Calculation of the overall margin |
| 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 |
Application: La Pâtisserie des Douceurs
| Formulas | Explanation |
|---|---|
| PV excluding tax = PA excluding tax + Margin | The sales price excluding tax (PV excluding tax) is equal to the purchase price excluding tax (PA excluding tax) increased by the margin. |
| PV including VAT = PV excluding VAT x (1 + VAT rate) | The sales price all taxes included (PV including tax) is equal to the sales price excluding tax (PV excluding tax) multiplied by the whole formed by 1 plus the VAT rate. |
| Margin = PV excluding tax – PA excluding tax | The margin is the difference between the sales price excluding tax (PV excluding tax) and the purchase price excluding tax (PA excluding tax). |
| Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 | The margin rate is the margin expressed as a percentage of the purchase price excluding tax (PA excluding tax). |
| Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 | The brand rate is the margin expressed as a percentage of the sales price excluding tax (PV excluding tax). |
| Unit margin = Margin ÷ Quantity sold | Unit margin is the margin divided by the quantity of items sold. |
| Overall Margin = Unit Margin x Quantity Sold | The overall margin is equal to the unit margin multiplied by the quantity sold. |
States :
La Pâtisserie des Douceurs sold 900 chocolate éclairs this month. The cost of manufacturing an éclair (Purchase Price excluding tax – PA excluding tax) is €1,50. The pastry shop wishes to make a margin of 50% on the Purchase Price excluding taxes. The applicable VAT rate is 5,5%.
Work to do :
1. Calculate the sales price excluding tax (PV excluding VAT) of an éclair.
2. Calculate the sales price all taxes included (PV including tax) of an éclair.
3. Calculate the unit margin and overall margin.
4. Calculate margin rate and brand rate.
5. Analyze the results to advise the Pastry Shop on its pricing strategy.
Proposed correction:
1. The sales price excluding tax of an éclair is calculated using the formula: PV excluding tax = PA excluding tax + Margin. In this case, the margin is 50% of the PA excluding tax, i.e. €1,50 x 50/100 = €0,75. Thus, the PV excluding tax is €1,50 + €0,75 = €2,25.
2. The sales price all taxes included is calculated as follows: PV incl. VAT = PV excluding VAT x (1 + VAT rate) = €2,25 x (1 + 5,5/100) = €2,37.
3. The unit margin is calculated using the formula: Unit margin = Margin ÷ Quantity sold = €0,75 ÷ 1 flash = €0,75/light. The overall margin is calculated: Unit margin x Quantity sold = €0,75 x 900 = €675.
4. The margin rate is calculated as follows: Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 = ((€2,25 – €1,50) ÷ €1,50) x 100 = 50%. The brand rate is also calculated: Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 = ((€2,25 – €1,50) ÷ €2,25) x 100 = 33,33, XNUMX%.
5. By analyzing the results, we can see that the margin rate of 50% allows the pastry shop to achieve a significant overall margin of €675. This amount goes a long way towards covering the operating costs of the business. The brand rate is lower than the margin rate because it is expressed as a percentage of the PV excluding tax. These indicators should help Pâtisserie des Douceurs determine whether its pricing policy is appropriate.
Summary of Formulas Used:
| Packages | Meaning |
|---|---|
| Overall margin = Unit margin x quantity sold | Overall margin represents the total profit made by a company from selling a certain number of products. |
| Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 | The Margin Rate measures what portion of the Purchase Price excluding taxes is transformed into profit. |
| Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 | The Mark Rate measures what portion of the Sales Price excluding tax is transformed into profit. |
| Sales price including VAT = Sales price excluding VAT + (Sales price excluding VAT x VAT rate/100) | The sales price including VAT is the price at which the product is sold after adding VAT. |
| VAT = Sales price excluding VAT x VAT rate/100 | VAT, or value added tax, is an indirect tax on consumption. |
Application: Progitech company
States :
You are the financial manager of the company Progitech, specialized in the sale of IT products. One of the company's flagship references is a laptop sold for €799 including VAT with a VAT rate of 20%, and purchased for €500 excluding VAT from the supplier.
Work to do :
1. Calculate the tax-free selling price of the computer.
2. Calculate the computer's VAT.
3. Calculate the unit margin made by the company on the sale of the computer.
4. Calculate the overall margin if the company sells 1000 computers.
5. Calculate markup and brand rates.
Proposed correction:
1. Sales price excluding tax = Sales price including tax / (1 + VAT rate/100) = €799 / (1 + 20/100) = €665,83.
2. VAT = Sales price excluding VAT x VAT rate/100 = €665,83 x 20/100 = €133,17.
3. Unit margin = PV excluding tax – PA excluding tax = €665,83 – €500 = €165,83.
4. Overall margin = Unit margin x quantity sold = €165,83 x 1000 = €165.
5. Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 = ((€665,83 – €500) ÷ €500) x 100 = 33,17%
Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 = ((€665,83 – €500) ÷ €665,83) x 100 = 24,90%
Application: IDEAL Supermarket
States :
The company “Supermarché IDÉAL” is an SME specializing in the sale of food products. After a period of market observation, it concluded an agreement with a fruit and vegetable producer to sell, exclusively, 20000 apples per year at a purchase price excluding tax (PA excluding tax) of €0,4 per apple. . The VAT rate applicable to this product is 5,5%. Very concerned about its profitability and competitiveness, the company “Supermarché IDÉAL” would like to achieve a unit margin of €0,2 per apple sold.
Work to do :
1. What will be the Sales Price excluding tax (PV excluding tax) of each apple?
2. What will be the Sales Price All Taxes Included (PV including VAT) of each apple?
3. What will be the VAT on each apple?
4. What will be the overall margin of the 20000 apples?
5. What will be the margin and brand rates?
Proposed correction:
1. The PV excluding tax is calculated by the formula: PV excluding tax = PA excluding tax + Unit Margin. We have PA excluding VAT = 0,4 €, Unit margin = 0,2 € therefore PV excluding VAT = 0,4 € + 0,2 € = 0,6 €.
2. The PV including tax is calculated by the formula: PV including tax = PV excluding tax x (1 + (VAT rate/100)). We have PV excluding tax = €0,6, VAT rate = 5,5% therefore PV including tax = €0,6 x (1 + 5,5/100) = €0,633.
3. VAT is calculated by subtracting the PV excluding tax from the PV including tax, i.e. VAT = PV including tax – PV excluding tax therefore VAT = €0,633 – €0,6 = €0,033.
4. The overall margin is calculated by the formula: Overall margin = Unit margin x Quantity sold. We have Unit margin = €0,2, Quantity sold = 20000 therefore Overall margin = €0,2 x 20000 = €4000.
5. The margin rate is calculated by the formula: Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100. We have PV excluding tax = €0,6, PA excluding tax = €0,4 therefore Rate margin = ((€0,6 – €0,4) ÷ €0,4) x 100 = 50%.
The brand rate is calculated by the formula: Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100. We have PV excluding tax = 0,6 €, PA excluding tax = 0,4 € therefore Brand rate = ((€0,6 – €0,4) ÷ €0,6) x 100 = 33,33%.
Summary of Formulas Used:
| Concept | Packages |
|---|---|
| PV HT | PV excluding tax = PA excluding tax + Unit margin |
| PV including tax | PV including VAT = PV excluding VAT x (1 + (VAT rate/100)) |
| VAT | VAT = PV including VAT – PV excluding VAT |
| 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 |
Application: Business Fashion Store
States :
The Fashion Store company is a fashion company that sells clothes of the latest trend. She recently purchased a batch of 100 dresses at a purchase price excluding tax (PA excluding tax) of €50 each. The company wants to achieve a unit margin of €30 per dress. The current VAT rate is 20%.
Work to do :
1. Calculate the sales price excluding tax (PV excluding VAT) for each dress.
2. Calculate the sales price including tax (PV including tax) for each dress.
3. Calculate the VAT amount for each dress.
4. Calculate the markup and brand rate on each dress.
5. Calculate the overall margin on the batch of dresses.
Proposed correction:
1. The sales price excluding tax (PV excluding tax) is calculated by adding the purchase price excluding tax (PA excluding tax) and the unit margin. So, PV excluding tax = PA excluding tax + Unit margin = €50 + €30 = €80.
2. The sales price including tax (PV including tax) is calculated by adding the sales price excluding tax (PV excluding tax) and VAT. So, PV including VAT = PV excluding VAT + (PV excluding VAT x VAT rate) = 80€ + (80€ x 20%) = 80€ + 16€ = 96€.
3. The amount of VAT is calculated by multiplying the sales price excluding tax (PV excluding tax) and the VAT rate. So, VAT = PV excluding VAT x VAT rate = €80 x 20% = €16.
4. The margin rate is calculated by dividing the unit margin by the purchase price excluding tax (PA excluding tax) then multiplying by 100. Therefore, Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 = ((80€ – 50€) ÷ 50€) x 100 = 60%. The brand rate is calculated by dividing the unit margin by the sales price excluding tax (PV excluding tax) then multiplying by 100. Therefore, Brand rate = ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 = ( (80€ – 50€) ÷ 80€) x 100 = 37,5%.
5. The overall margin is calculated by multiplying the unit margin by the quantity sold. So, Overall margin = Unit margin x quantity sold = €30 x 100 = €3000.
Summary of Formulas Used:
| Formulas | Description |
|---|---|
| PV excluding tax = PA excluding tax + Unit margin | Calculation of the sales price excluding taxes |
| PV including VAT = PV excluding VAT + (PV excluding VAT x VAT rate) | Calculation of the sales price including tax |
| VAT = PV excluding VAT x VAT rate | Calculation of the VAT amount |
| 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 |
| Overall margin = Unit margin x quantity sold | Calculation of the overall margin |
Application: The Small Business
States :
Le Petit Commerce is a small local business selling local products. She recently acquired a batch of local honey.
– The purchase price excluding tax for honey is €5,00 per jar.
– The envisaged sales price excluding tax is €7,00 per pot.
– The applicable VAT rate is 20%.
Work to do :
1. Calculate the VAT amount per jar.
2. Calculate the sales price including tax per pot.
3. Calculate the unit margin.
4. Calculate the overall margin if 200 jars are sold.
5. Calculate margin and brand rates.
Proposed correction:
1. VAT amount per pot = (Sales price excluding VAT x VAT rate) = €7,00 x 0,20 = €1,40.
2. Sales price including VAT per pot = Sales price excluding VAT + Amount of VAT = €7,00 + €1,40 = €8,40.
3. Unit margin = Sales price excluding tax – Purchase price excluding tax = €7,00 – €5,00 = €2,00.
4. Overall margin = Unit margin x Quantity sold = €2,00 x 200 = €400,00.
5. Margin rate = ((Selling price excluding tax – Purchase price excluding tax) ÷ Purchase price excluding tax) x 100 = ((€7,00 – €5,00) ÷ €5,00) x 100 = 40,00%.
Brand rate = ((Sales price excluding tax – Purchase price excluding tax) ÷ Sales price excluding tax) x 100 = ((€7,00 – €5,00) ÷ €7,00) x 100 = 28,57 %.
Summary of Formulas Used:
| Formulas | Explanation |
|---|---|
| VAT amount | Sales price excluding VAT x VAT rate |
| Sales price including tax | Sales price excluding tax + VAT amount |
| Unit margin | Sales price excluding tax – Purchase price excluding tax |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((Selling price excluding tax – Purchase price excluding tax) ÷ Purchase price excluding tax) x 100 |
| Brand taxes | ((Sales price excluding tax – Purchase price excluding tax) ÷ Sales price excluding tax) x 100 |
Application: RestoDelice Company
States :
As part of its operational management, the company RestoDelice wishes to analyze and optimize its pricing policy. This company specializes in fast food and offers a wide range of products such as sandwiches, pizzas and drinks. The information related to one of these products (a chicken sandwich) is as follows:
– Purchase price excluding tax (PA excluding tax): €2,50
– VAT rate applied: 5,5%
– Quantity sold: 200 units per day
– Envisaged sales price including tax: €5
Work to do :
1. What will be the sales price excluding tax (PV excluding VAT) with the VAT rate applied?
2. What will be the unit margin achieved by RestoDelice on the sale of a chicken sandwich?
3. What will be the amount of the overall margin achieved by RestoDelice in one day?
4. What is RestoDelice’s margin rate on the chicken sandwich?
5. What is RestoDelice's mark-up rate on chicken sandwich?
Proposed correction:
1. The sales price including tax is €5. To calculate the sales price excluding tax (PV excluding tax), we use the formula: PV including tax ÷ (1 + VAT rate) or €5 ÷ (1+5,5/100) = €4,74
2. The unit margin is obtained by subtracting the purchase price excluding tax (PA excluding tax) from the selling price excluding tax (PV excluding tax). So, Unit margin = PV excluding tax – PA excluding tax = €4,74 – €2,50 = €2,24
3. The overall margin is obtained by multiplying the unit margin by the quantity sold. So, Overall margin = Unit margin x Quantity sold = €2,24 x 200 = €448
4. The margin rate is calculated using the formula: ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 or ((€4,74 – €2,50) ÷ €2,50) x 100 = 89,6 .XNUMX%
5. The brand rate is calculated using the formula: ((PV excluding tax – PA excluding tax) ÷ PV excluding tax) x 100 or ((€4,74 – €2,50) ÷ €4,74) x 100 = 47,26 .XNUMX%
Summary of Formulas Used:
| Item | Formulas |
|---|---|
| Selling price excluding tax | PV including VAT ÷ (1 + VAT rate) |
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100) |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100) |
Application: Boutique “La Mode Sereine”
States :
The Boutique “La Mode Sereine” specializes in the sale of women’s clothing. The store manager wants to analyze his operational management in order to optimize his income.
He sells a popular model of dress at the retail price including tax of €90. The purchase costs excluding tax for each dress for the store are €35. He sold 200 dresses last month. The applicable VAT rate is 20%.
Work to do :
1. Calculate the sales price excluding tax of the dress.
2. How much VAT is on each dress?
3. How to calculate the unit margin of each dress?
4. What is the margin rate?
5. How to calculate the overall margin?
Proposed correction:
1. The calculation of the sales price excluding VAT is done by dividing the sales price including VAT by 1+VAT rate. In our case, PVHT = 90 ÷ (1+20/100) = 75 €.
2. The amount of VAT is calculated by subtracting the sales price excluding tax from the sales price including tax. So, VAT = 90 – 75 = €15.
3. The unit margin is calculated by subtracting the purchase cost excluding tax from the selling price excluding tax. Thus, Unit margin = 75 – 35 = €40.
4. The margin rate is calculated by dividing the margin by the purchase cost excluding tax, then multiplying by 100. Therefore, Margin rate = ((75 – 35) ÷ 35) x 100 = 114,29%.
5. The overall margin is calculated by multiplying the unit margin by the quantity sold. Thus, Overall margin = 40 x 200 = €8000.
Summary of Formulas Used:
| Concept | Formulas |
|---|---|
| Sales price excluding tax (PV excluding tax) | PV excluding tax = PV including tax ÷ (1+ VAT rate/100) |
| VAT amount | VAT = PV including VAT – PV excluding VAT |
| Unit margin | Unit margin = PV excluding tax – PA excluding tax |
| Margin rate | Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100 |
| Overall margin | Overall margin = Unit margin x quantity sold |
Application: The pastry shop of delights
States :
Mr. Dupont is the owner of the small bakery “La patisserie des délices”. He has just launched a new range of organic croissants. He bought the croissants at a price of €0,50 each.
He plans to sell these croissants with a 40% margin. However, he is hesitant about the VAT rate to apply, either 20% or 5,5%. After considering all the factors, he decides to apply the VAT rate of 5,5%.
Mr. Dupont is concerned about the financial management of his business and would like to do some calculations.
Work to do :
1. Calculate the sales price excluding tax (PV excluding VAT) of the croissants.
2. Calculate the sales price all taxes included (PV including VAT) of the croissants.
3. Calculate the VAT amount per crescent.
4. Calculate the unit margin made by Mr. Dupont on the sale of each croissant.
5. Calculate the overall margin if Mr. Smith sells 500 croissants.
Proposed correction:
1. To calculate the sales price excluding tax (PV excluding tax), we need to know the margin that Mr. Dupont wishes to achieve. Depending on your choice of making a margin of 40% on each croissant, we use the following formula:
PV excluding tax = PA excluding tax + (PA excluding tax x margin rate)
Which gives: PV excluding tax = €0,50 + (€0,50 x 40%) = €0,70.
2. To calculate the sales price including VAT, we must add VAT to the sales price excluding VAT. We use the following formula:
PV including VAT = PV excluding VAT + (PV excluding VAT x VAT rate)
Which gives: PV including tax = €0,70 + (€0,70 x 5,5%) = €0,74.
3. The amount of VAT per croissant is calculated by subtracting the sales price excluding tax from the sales price including tax. Either :
Amount of VAT = PV including tax – PV excluding tax
Which gives: VAT amount = €0,74 – €0,70 = €0,04.
4. The unit margin is the difference between the sales price excluding tax and the purchase price excluding tax. Either :
Unit margin = PV excluding tax – PA excluding tax
Which gives: Unit margin = €0,70 – €0,50 = €0,20.
5. Overall margin is calculated by multiplying the unit margin by the number of units sold. Either :
Overall margin = Unit margin x quantity sold
Which gives: Overall margin = €0,20 x 500 = €100.
Summary of Formulas Used:
| PV HT | = PA excluding tax + (PA excluding tax x margin rate) |
| PV including tax | = PV excluding VAT + (PV excluding VAT x VAT rate) |
| VAT amount | = PV including VAT – PV excluding VAT |
| Unit margin | = PV HT – PA HT |
| Overall margin | = Unit margin x quantity sold |