Summary
Application: Gourmet Flavors
States :
The bakery-pastry shop "Saveurs Gourmandes" located in the city center offers a wide variety of artisanal breads. The owner wants to analyze the profitability of his flagship product, walnut bread. The unit purchase price excluding tax is €1,50 and the unit sale price excluding tax is €2,50. On average, he sells 200 loaves per day.
Work to do :
- Calculate the unit margin made on each nut bread.
- Determine the overall margin over a day for the sale of 200 loaves.
- What is the margin rate on nut bread?
- Calculate the markup rate of nut bread.
- Give your analysis on the opportunity to increase the selling price to improve profitability.
Proposed correction:
- The unit margin is obtained by subtracting the purchase price excluding VAT from the sale price excluding VAT.
(€2,50 – €1,50 = €1,00).
Each loaf of bread generates a margin of €1,00.
- The overall margin is calculated by multiplying the unit margin by the number of loaves sold.
(€1,00 \times 200 = €200).
The margin made on a day of sales is €200.
- The margin rate is calculated as follows: ((PV HT – PA HT) ÷ PA HT \times 100).
((€2,50 – €1,50) ÷ €1,50 \times 100 = 66,67% ).
The margin rate is 66,67%.
- The markup rate uses this formula: ((PV HT – PA HT) ÷ PV HT \times 100).
((€2,50 – €1,50) ÷ €2,50 \times 100 = 40% ).
The mark rate is 40%.
- The opportunity to increase the selling price could be justified by a desire to increase the unit margin. However, if the price is already well positioned relative to the market and demand is stable, this could dissuade some customers from purchasing the product. A more in-depth analysis of market competitiveness would be necessary.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | (PV, HT – PA, HT) |
| Overall margin | (Margin, unit \times Quantity, sold) |
| Margin rate | (((PV , HT – PA , HT) ÷ PA , HT) \times 100) |
| Brand taxes | (((PV, HT – PA, HT) ÷ PV, HT) \times 100) |
Application: Tech Innov
States :
The company "Tech Innov" sells smartphone accessories. One of its products, a wireless charger, is purchased at a price of €10,00 excluding VAT and is sold at a price of €20,00 excluding VAT. Last year, Tech Innov sold 5 units of this charger. The manager wants to evaluate the commercial performance of this product.
Work to do :
- Calculate the unit margin of the wireless charger.
- What is the turnover from the sale of wireless chargers for the past year?
- Determine the overall margin achieved over the year.
- Calculate the margin rate for the wireless charger.
- Analyze the potential impact of a 10% lower selling price on overall margin, assuming sales volume increases by 20%.
Proposed correction:
- The unit margin is calculated by subtracting the pre-tax purchase price from the pre-tax selling price.
(€20,00 – €10,00 = €10,00).
Each wireless charger generates a margin of €10,00.
- The turnover is obtained by multiplying the selling price excluding tax and the sales volume.
(€20,00 \times 5 = €000).
The annual turnover amounts to €100.
- The overall margin is obtained by multiplying the unit margin by the number of chargers sold.
(€10,00 \times 5 = €000).
The total margin achieved for the year is €50.
- The margin rate is calculated as follows: ((PV HT – PA HT) ÷ PA HT \times 100).
((€20,00 – €10,00) ÷ €10,00 \times 100 = 100% ).
The margin rate is 100%.
- If the sales price is reduced by 10%, this comes to a new price of €18,00 excluding VAT. Assuming a 20% increase in sales, the new volume would be 6 units.
The new unit margin = (€18,00 – €10,00 = €8,00).
The new overall margin = (€8,00 \times 6 = €000).
Despite the price drop, increased sales could partly offset the reduction in unit margin, although the final overall margin would be slightly €2 lower than the initial one.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | (PV, HT – PA, HT) |
| Turnover | ( PV , HT \times Quantity , sold ) |
| Overall margin | (Margin, unit \times Quantity, sold) |
| Margin rate | (((PV , HT – PA , HT) ÷ PA , HT) \times 100) |
Application: Ethical Fashion
States :
Mode Éthique is an innovative start-up specializing in eco-responsible clothing. It offers an organic wool coat at a purchase cost of €80,00 excluding VAT for a sale price set at €150,00 excluding VAT. In the last quarter, 600 coats were sold. The company is examining the performance of this product.
Work to do :
- Calculate the unit margin made on each coat.
- Determine the turnover achieved for coats sold this quarter.
- Calculate the overall quarterly margin for coats.
- What is the markup rate achieved on the coat?
- Discuss the implications of reducing production costs by 15% on product profitability.
Proposed correction:
- The unit margin is obtained by subtracting the purchase price excluding VAT from the sale price excluding VAT.
(€150,00 – €80,00 = €70,00).
Each coat generates a margin of €70,00.
- The turnover is calculated by multiplying the net sales price by the sales volume.
(€150,00 \times 600 = €90).
The quarterly turnover is €90.
- The overall margin is obtained by multiplying the unit margin by the number of coats sold.
(€70,00 \times 600 = €42).
The overall margin achieved during the quarter is €42.
- The markup rate is calculated as follows: ((PV HT – PA HT) ÷ PV HT \times 100).
((€150,00 – €80,00) ÷ €150,00 \times 100 = 46,67% ).
The mark rate is 46,67%.
- If production costs are reduced by 15%, the new net PA becomes (€80,00 \times 0,85 = €68,00). This would increase the unit margin to (€150,00 – €68,00 = €82,00).
With the same sales, the new overall margin would be (€82,00 \times 600 = €49).
A reduction in production costs would thus significantly improve the profitability of the product, increasing the overall margin by €7.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | (PV, HT – PA, HT) |
| Turnover | ( PV , HT \times Quantity , sold ) |
| Overall margin | (Margin, unit \times Quantity, sold) |
| Brand taxes | (((PV, HT – PA, HT) ÷ PV, HT) \times 100) |
Application: Organic Health
States :
“Technologie Santé Bio” develops and sells organic food supplements. One of these products, Vitalcap, is purchased for €6,00 excluding VAT and sold for €15,00 excluding VAT. Over the last six months, 2 units have been sold. The financial manager wants to understand the performance of this product.
Work to do :
- Calculate the margin rate for the Vitalcap food supplement.
- Determine the markup rate of this item.
- Calculate the revenue from the sale of Vitalcap over the six-month period.
- Determine the overall margin obtained in six months.
- Estimate the effect of a 15% price increase on the margin rate.
Proposed correction:
- The margin rate is calculated as follows: ((PV HT – PA HT) ÷ PA HT \times 100).
((€15,00 – €6,00) ÷ €6,00 \times 100 = 150% ).
The margin rate is 150%.
- The mark rate is determined using: ((PV HT – PA HT) ÷ PV HT \times 100).
((€15,00 – €6,00) ÷ €15,00 \times 100 = 60% ).
The mark rate is 60%.
- Revenue is the multiplication of the selling price by the number of units sold.
(€15,00 \times 2 = €000).
The turnover for six months amounts to €30.
- The overall margin is obtained by multiplying the unit margin (PV HT – PA HT) by the number of units sold.
((€15,00 – €6,00) \times 2 = €000 ).
The overall margin achieved during this period is €18.
- With a 15% increase, the new PV excluding tax is (€15,00 \times 1,15 = €17,25).
The new margin rate would be (((€17,25 – €6,00) ÷ €6,00 \times 100 = 187,5%) ).
The price increase would lead to an increased margin rate, rising to 187,5%, significantly improving profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | (((PV , HT – PA , HT) ÷ PA , HT) \times 100) |
| Brand taxes | (((PV, HT – PA, HT) ÷ PV, HT) \times 100) |
| Turnover | ( PV , HT \times Quantity , sold ) |
| Overall margin | ( (PV , HT – PA , HT) \times Quantity , sold ) |
Application: EcoloTrans
States :
ÉcoloTrans is an eco-friendly transport company that uses exclusively bicycles for its deliveries. It offers an express service at €25,00 excluding VAT per delivery, while each service generates an average cost of €10,00 excluding VAT. Over the last month, 800 deliveries were made.
Work to do :
- Calculate the company's turnover for the last month.
- Determine the unit margin per delivery.
- What is the margin rate applied by ÉcoloTrans on each delivery?
- Calculate the overall margin achieved over the month.
- Discuss the advantages and disadvantages of a price reduction strategy to increase volumes.
Correction suggestion:
- Monthly turnover is calculated by multiplying the rate by the number of deliveries made.
(€25,00 \times 800 = €20).
The turnover for last month is €20.
- The unit margin is calculated by subtracting the cost from the service rate.
(€25,00 – €10,00 = €15,00).
Each service generates a margin of €15,00.
- The margin rate is obtained with this formula: ((PV HT – PA HT) ÷ PA HT \times 100).
((€25,00 – €10,00) ÷ €10,00 \times 100 = 150% ).
The margin rate per delivery is 150%.
- The overall margin is obtained by multiplying the unit margin by the number of services.
(€15,00 \times 800 = €12).
The overall margin achieved this month is €12.
- A price reduction could attract more customers, increasing the volume of shipments. However, such a strategy could also reduce the unit margin and, consequently, reduce the overall margin if the increase in volumes does not sufficiently compensate. A market analysis is essential to properly balance these options.
Formulas Used:
| Title | Formulas |
|---|---|
| Turnover | ( PV , HT \times Number , of , deliveries ) |
| Unit margin | (Price, excluding VAT – Cost, excluding VAT) |
| Margin rate | (((PV , HT – PA , HT) ÷ PA , HT) \times 100) |
| Overall margin | ( Margin , unit \times Number , of , deliveries ) |
Application: VisionTech
States :
The company "VisionTech" designs augmented reality glasses. Its flagship model, the HyperSpectra, is offered at a price of €500,00 excluding VAT, with a production cost of €350,00 excluding VAT. Over the last half year, 1 units were sold. The director would like to know the financial performance of this product.
Work to do :
- Calculate the unit margin on each pair of glasses.
- Determine the turnover excluding tax for the HyperSpectra model over the half-year.
- Calculate the markup rate of the product.
- What overall margin was achieved on these sales?
- Analyze the potential impact of technological improvement on cost price and sales.
Proposed correction:
- The unit margin is obtained by subtracting the production cost from the selling price excluding tax.
(€500,00 – €350,00 = €150,00).
Each pair of glasses generates a margin of €150,00.
- Total sales are calculated by multiplying the sales price by the number of units sold.
(€500,00 \times 1 = €500).
The half-yearly turnover for the product is €750.
- The markup rate is calculated as follows: ((PV HT – PA HT) ÷ PV HT \times 100).
((€500,00 – €350,00) ÷ €500,00 \times 100 = 30% ).
The product's markup rate is 30%.
- The overall margin is obtained by multiplying the unit margin by the number of units sold.
(€150,00 \times 1 = €500).
The overall margin obtained is €225.
- Technological improvement can reduce the cost price of the product, thus increasing the unit and overall margin if the selling price remains the same. However, care must be taken not to increase the cost associated with this improvement excessively in order to maintain a good level of profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | (PV, HT – PA, HT) |
| Turnover | ( PV , HT \times Quantity , sold ) |
| Brand taxes | (((PV, HT – PA, HT) ÷ PV, HT) \times 100) |
| Overall margin | (Margin, unit \times Quantity, sold) |
Application: BioLocavore
States :
"BioLocavore" is a supermarket chain specializing in local and organic products. One of their flagship products, the organic fruit basket, is sold for €25,00 excluding VAT with a cost of €15,00 excluding VAT. They sell an average of 1 baskets per month. The manager wants to measure the commercial performance of this item.
Work to do :
- Calculate the unit margin of the fruit basket.
- Determine the monthly revenue for these baskets.
- What is the margin rate applied to this product?
- Calculate the overall monthly margin achieved.
- Analyze the impact of a partnership with a new supplier reducing procurement costs by 10%.
Proposed correction:
- The unit margin is obtained by subtracting the pre-tax purchase price from the pre-tax selling price.
(€25,00 – €15,00 = €10,00).
Each basket sale generates a margin of €10,00.
- Monthly turnover is obtained by multiplying the sales price by the monthly volume sold.
(€25,00 \times 1 = €200).
The monthly turnover for these baskets is €30.
- The margin rate is calculated by: ((PV HT – PA HT) ÷ PA HT \times 100).
((€25,00 – €15,00) ÷ €15,00 \times 100 = 66,67% ).
The margin rate is 66,67%.
- The overall margin is obtained by multiplying the unit margin by the number of baskets sold.
(€10,00 \times 1 = €200).
The overall monthly margin achieved is €12.
- If a new supplier reduces procurement costs by 10%, the basket cost becomes (€15,00 \times 0,90 = €13,50). The new unit margin would be (€25,00 – €13,50 = €11,50).
The new overall margin, with the same sales, would be (€11,50 \times 1 = €200).
A partnership improving supply costs would increase the overall margin by €1, strengthening profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | (PV, HT – PA, HT) |
| Turnover | ( PV , HT \times Quantity , sold ) |
| Margin rate | (((PV , HT – PA , HT) ÷ PA , HT) \times 100) |
| Overall margin | (Margin, unit \times Quantity, sold) |
Application: EcoHome
States :
"MaisonÉco" is a company specializing in the manufacture of recycled wood furniture. The recycled oak desk is sold for €300,00 excluding VAT for a production cost of €200,00 excluding VAT. During the last quarter, 450 units were sold. Management would like to evaluate the performance of this product.
Work to do :
- What is the quarterly turnover for these offices?
- Calculate the unit margin obtained for each desk sold.
- Determine the markup rate charged for this product.
- Calculate the overall margin achieved during the quarter.
- What would be the effect on the overall margin if the cost of production increased by 5%?
Proposed correction:
- Quarterly sales are calculated by multiplying the sales price by the number of units sold.
(€300,00 \times 450 = €135).
The turnover is €135.
- The unit margin is obtained by subtracting the production cost excluding tax from the selling price excluding tax.
(€300,00 – €200,00 = €100,00).
Each office generates a margin of €100,00.
- The markup rate uses this formula: ((PV HT – PA HT) ÷ PV HT \times 100).
((€300,00 – €200,00) ÷ €300,00 \times 100 = 33,33% ).
The mark rate is 33,33%.
- The overall margin is obtained by multiplying the unit margin by the number of desks sold.
(€100,00 \times 450 = €45).
The overall quarterly margin is €45.
- If the production cost increases by 5%, the new cost becomes (€200,00 \times 1,05 = €210,00). The new unit margin would be (€300,00 – €210,00 = €90,00).
The new overall margin would be (€90,00 \times 450 = €40).
An increase in the cost of production would reduce the overall margin by €4, thus reducing profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Turnover | ( PV , HT \times Quantity , sold ) |
| Unit margin | (PV, HT – PA, HT) |
| Brand taxes | (((PV, HT – PA, HT) ÷ PV, HT) \times 100) |
| Overall margin | (Margin, unit \times Quantity, sold) |
Application: TechRevolution
States :
TechRevolution sells customizable laptops. One model, the FlexBook, is sold at a price of €1 excluding VAT, while the manufacturing cost is €200,00 excluding VAT. Over the course of a year, 800,00 FlexBooks were sold. The company wants to analyze the margins of this product.
Work to do :
- Calculate the FlexBook unit margin.
- What is the annual turnover for this product?
- Determine the margin rate applied by TechRevolution.
- Calculate the overall annual margin achieved for the FlexBook.
- Discuss the impact of an R&D investment increasing quality by 20% on product positioning.
Proposed correction:
- The unit margin is obtained by subtracting the manufacturing cost excluding tax from the selling price excluding tax.
(€1 – €200,00 = €800,00).
Each FlexBook generates a margin of €400,00.
- Annual sales are calculated by multiplying the sales price by the number of units sold.
(€1 \times 200,00 = €3).
The annual turnover is €3.
- The margin rate is calculated as follows: ((PV HT – PA HT) ÷ PA HT \times 100).
((€1 – €200,00) ÷ €800,00 \times 800,00 = 100%).
The margin rate is 50%.
- The overall margin is obtained by multiplying the unit margin by the number of units sold.
(€400,00 \times 3 = €000).
The overall annual margin achieved is €1.
- An investment in R&D, resulting in a 20% improvement in quality, could reposition the FlexBook in the market by increasing its perceived value and potentially its selling price. This could increase unit margin and attract a more premium customer base, thereby strengthening TechRevolution's profitability and brand image.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | (PV, HT – PA, HT) |
| Turnover | ( PV , HT \times Quantity , sold ) |
| Margin rate | (((PV , HT – PA , HT) ÷ PA , HT) \times 100) |
| Overall margin | (Margin, unit \times Quantity, sold) |