Summary
Application: Urban Bikes
States :
The company "Vélos Urbains" specializes in selling electric bikes to city dwellers who want to adopt ecological means of transport. It is currently offering an interesting promotion to boost its sales. Here are the key data of the flagship product: the purchase price excluding tax (PA HT) of a bike is €850, and the sale price excluding tax (PV HT) is €1. The quantity of bikes sold during this promotion is 200 units.
Work to do :
- Calculate the margin rate made on the bicycles sold by the company.
- Determine the total amount of overall margin earned on all sales during the promotion.
- Evaluate the markup rate applied to the sale price of the bikes.
- If the company wants to maintain a margin rate of 30%, what should the new selling price excluding tax be?
- Analyze the impact that a reduction of €100 in the PV excluding tax would have on the margin rate.
Proposed correction:
-
Margin rate:
Let’s use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Let's substitute the values: ((1 – 200) ÷ 850) x 850 = 100%.
The margin rate achieved on bicycles is 41,18%. -
Overall margin:
Let's use the formula: Unit Margin x Quantity Sold.
Let’s calculate: (1 – 200) x 850 = €300.
The overall margin obtained on all sales is €105. -
Mark rate:
Let’s use the formula: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Let's replace: ((1 – 200) ÷ 850) x 1 = 200%.
The applied markup rate is 29,17%.
-
Selling price for a margin rate of 30%:
Let’s use the formula: PV HT = PA HT x (1 + Margin rate).
Let’s calculate: 850 x (1 + 0,30) = €1.
The new PV excluding tax should be €1. -
Impact of a reduction of €100 on the PV excluding tax:
New PV excluding tax = 1 – 200 = €100.
Let's use the formula: Margin rate = ((1 – 100) ÷ 850) x 850.
Let's calculate: (250 ÷ 850) x 100 = 29,41%.
A reduction of €100 brings the margin rate to 29,41%.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x Quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| Selling price excluding tax | PA HT x (1 + Margin rate) |
Application: Gourmets and Delights
States :
Gourmets et Délices, a high-end pastry shop, wants to analyze the profitability of its new fruit tarts. The purchase price of the ingredients for a tart is €5,50, and it was sold at a price of €11 excluding tax. During the last month, 500 tarts were sold. The applicable VAT is 5,5%.
Work to do :
- Calculate the margin rate of the fruit tarts sold.
- Determine the overall margin made on all sales for the month.
- Calculate the selling price including tax of a pie.
- If Gourmets et Délices wants a markup rate of 40%, what should the new PV excluding tax be?
- What will be the unit margin available if the purchase price increases by €1 while maintaining the same PV excluding tax?
Proposed correction:
-
Margin rate:
Let’s use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Let's calculate: ((11 – 5,50) ÷ 5,50) x 100 = 100%.
The margin rate on pies is 100%. -
Overall margin:
Let's use the formula: Unit Margin x Quantity Sold.
Let’s calculate: (11 – 5,50) x 500 = €2.
The overall margin obtained is €2. -
PV including tax:
Let’s use the formula: PV TTC = PV HT x (1 + VAT rate).
Let’s calculate: 11 x (1 + 0,055) = €11,605.
The VAT-inclusive price of a pie is €11,605.
-
New PV HT for a mark rate of 40%:
Let’s use the formula: PV HT = PA HT ÷ (1 – Markup rate).
Let’s calculate: 5,50 ÷ (1 – 0,40) = €9,17.
The new PV excluding tax must be €9,17. -
Impact of a €1 increase in the purchase price:
New PA HT = 5,50 + 1 = 6,50 €.
Unit margin = 11 – 6,50 = €4,50.
The available unit margin will be €4,50.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x Quantity sold |
| PV including tax | PV excluding VAT x (1 + VAT rate) |
| New PV HT | PA HT ÷ (1 – Mark rate) |
| Unit margin | PV HT – PA HT |
Application: Eco-Furniture
States :
Eco-Mobilier, an online store specializing in eco-friendly furniture, sells tables made from recycled materials. The manufacturing cost per unit is €95, and the selling price excluding tax is €180. The store sold 1 tables during the year.
Work to do :
- Calculate the margin rate per unit of table sold.
- Determine the overall annual margin obtained on sales.
- What would be the impact on overall margin if sales volume increased by 20%?
- If the company wants to lower its selling price excluding tax by 10%, what would the new margin rate be?
- Analyze the financial consequences of an increase in production costs of €10 per unit on the unit margin.
Proposed correction:
-
Margin rate:
Let’s use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Let's calculate: ((180 – 95) ÷ 95) x 100 = 89,47%.
The margin rate per table unit sold is 89,47%. -
Overall margin:
Let's use the formula: Unit Margin x Quantity Sold.
Let’s calculate: (180 – 95) x 1 = €500.
The overall annual margin obtained is €127. -
Impact of a 20% increase in sales:
New quantity sold = 1 x (500 + 1) = 0,20.
New overall margin = 85 x 1 = €800.
With a 20% increase, the overall margin would be €153.
-
New margin rate after 10% drop in the PV excluding tax:
New PV excluding tax = 180 x (1 – 0,10) = €162.
New margin rate = ((162 – 95) ÷ 95) x 100 = 70,53%.
The new margin rate would be 70,53%. -
Impact of a €10 increase in production costs:
New PA HT = 95 + 10 = 105 €.
New unit margin = 180 – 105 = €75.
The increase in costs reduces the unit margin to €75.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x Quantity sold |
| New quantity sold | Initial quantity x (1 + Percentage increase) |
| New margin rate | ((New PV HT – PA HT) ÷ PA HT) x 100 |
| New unit margin | PV HT – New PA HT |
Application: Tech Innov
States :
Tech Innov is a technology company that recently launched a new smartphone model. The production cost of each device is €300, and it is sold at €750 excluding VAT. In one year, 10 units have been sold.
Work to do :
- Calculate the margin rate of this smartphone model.
- Estimate the total margin earned on annual sales of this product.
- If the company expects sales to increase by 15%, what will the new overall margin be?
- Determine the new selling price excluding tax required if the company wishes to increase its unit margin by €50.
- Discuss the strategic consequences of a €50 reduction in the net selling price on turnover.
Proposed correction:
-
Margin rate:
Let’s use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Let's calculate: ((750 – 300) ÷ 300) x 100 = 150%.
The margin rate of this smartphone is 150%. -
Total margin:
Let's use the formula: Unit Margin x Quantity Sold.
Let’s calculate: (750 – 300) x 10 = €000.
The total margin obtained is €4. -
New overall margin after 15% increase in sales:
New quantity sold = 10 x (000 + 1) = 0,15.
New overall margin = 450 x 11 = €500.
The new overall margin would be €5.
-
New PV excluding tax to increase the unit margin by €50:
New unit margin = 450 + 50 = €500.
New PV excluding tax = 300 + 500 = 800 €.
The new PV excluding tax must be €800. -
Consequences of a €50 reduction in the PV excluding tax:
New PV excluding tax = 750 – 50 = 700 €.
New unit margin = 700 – 300 = €400.
Margin reduction of €50, potentially impacting total turnover.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Total margin | Unit margin x Quantity sold |
| New quantity sold | Initial quantity x (1 + Percentage increase) |
| New PV HT | PA HT + New unit margin |
| New unit margin | New PV HT – PA HT |
Application: Naturally Organic
States :
Naturellement Bio, an organic products store, is launching a special offer on its essential oils. Currently, the cost price for a bottle is €7 and the selling price excluding tax is €20. 1 units are sold per month.
Work to do :
- Establish the current margin rate per bottle of essential oil.
- Calculate the overall monthly margin for these sales.
- State the new margin rate if the purchase price increases by €2 but the net sales tax remains constant.
- Calculate the sales price including tax applied with a VAT of 5,5%.
- Consider possible strategies if forecasts show a 10% drop in demand next month.
Proposed correction:
-
Margin rate:
Let’s use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Let's calculate: ((20 – 7) ÷ 7) x 100 = 185,71%.
The current margin rate is 185,71%. -
Monthly overall margin:
Let's use the formula: Unit Margin x Quantity Sold.
Let’s calculate: (20 – 7) x 1 = €200.
The overall monthly margin is €15. -
New margin rate with a €2 increase in PA:
New PA HT = 7 + 2 = 9 €.
Margin rate = ((20 – 9) ÷ 9) x 100 = 122,22%.
The new margin rate will be 122,22%.
-
PV including tax:
Let’s use the formula: PV TTC = PV HT x (1 + VAT rate).
Let’s calculate: 20 x (1 + 0,055) = €21,10.
The PV including tax is €21,10. -
Strategies for a 10% drop in demand:
New predicted quantity sold = 1 x (200 – 1) = 0,10 units.
Possible strategies: adjust stock, offer promotions or diversify the offer.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Monthly overall margin | Unit margin x Quantity sold |
| PV including tax | PV excluding VAT x (1 + VAT rate) |
| New quantity sold | Initial quantity x (1 – Percentage of demand decline) |
| New margin rate | ((PV HT – New PA HT) ÷ New PA HT) x 100 |
Application: Sport and Health
States :
Sport et Santé, a chain of sports stores, decides to promote its new cutting-edge running shoes. The purchase cost is €45 excluding VAT per pair and the sale price is €85 excluding VAT. For a special event, 800 pairs were sold through their various stores.
Work to do :
- Calculate the average margin rate made on each pair of shoes.
- Estimate the total margin generated by this event.
- If a store wants to increase sales by 25%, how many more pairs should it sell?
- Determine the markup rate applied to the sale price.
- Imagine that the purchase cost increased by 10%, what impact will this have on the initial margin rate?
Proposed correction:
-
Margin rate:
Let’s use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Let's calculate: ((85 – 45) ÷ 45) x 100 = 88,89%.
The average margin rate is 88,89%. -
Total margin:
Let's use the formula: Unit Margin x Quantity Sold.
Let’s calculate: (85 – 45) x 800 = €32.
The total margin generated is €32. -
Additional sales to increase by 25%:
Extra pairs = 800 x 0,25 = 200.
To increase by 25%, the store must sell 200 additional pairs.
-
Mark rate:
Let’s use the formula: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Let's calculate: ((85 – 45) ÷ 85) x 100 = 47,06%.
The applied markup rate is 47,06%. -
Impact of a 10% increase in purchase cost:
New PA HT = 45 x 1,10 = €49,50.
New margin rate = ((85 – 49,50) ÷ 49,50) x 100 = 71,72%.
The increase in cost reduces the margin rate to 71,72%.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Total margin | Unit margin x Quantity sold |
| Additional pairs | Quantity sold x Percentage increase |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New margin rate | ((PV HT – New PA HT) ÷ New PA HT) x 100 |
Application: Light & Design
States :
The company "Lumière & Design", specializing in creative lighting, offers a limited edition of an ecological floor lamp. The production cost is €110 excluding VAT and they are sold at €250 excluding VAT. A total of 600 floor lamps were produced for this edition.
Work to do :
- Calculate the margin rate for each lamp sold.
- If all the street lamps are sold, what will be the total margin made?
- Suppose the company has to apply a 20% discount on the selling price, what will be the margin rate after discount?
- Evaluate the strategic impact if only 75% of the streetlights are sold.
- Estimate the selling price required to achieve a 50% markup rate.
Proposed correction:
-
Margin rate:
Let’s use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Let's calculate: ((250 – 110) ÷ 110) x 100 = 127,27%.
The margin rate for each street lamp is 127,27%. -
Total margin if all sold:
Let's use the formula: Unit Margin x Quantity Sold.
Calculation: (250 – 110) x 600 = €84.
The total margin would be €84. -
Margin rate after 20% discount:
Price after discount = 250 x (1 – 0,20) = €200.
New margin rate = ((200 – 110) ÷ 110) x 100 = 81,82%.
The margin rate after discount is 81,82%.
-
Impact if only 75% are sold:
Quantity sold = 600 x 0,75 = 450.
Total margin = (250 – 110) x 450 = €63.
A 75% sale leads to a total margin of €63. -
PV required for a 50% mark rate:
Let’s use the formula: PV HT = PA HT ÷ (1 – Markup rate).
Let’s calculate: 110 ÷ (1 – 0,50) = €220.
The required sale price would be €220.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Total margin | Unit margin x Quantity sold |
| New margin rate | ((New PV – HT PA) ÷ HT PA) x 100 |
| PV HT required | PA HT ÷ (1 – Mark rate) |
| Quantity sold | Initial Quantity x Sales Percentage |
Application: Zen and Spa
States :
Zen et Spa sells high-end wooden hot tubs. The production cost is €1 excluding VAT per unit, and they are sold at €200 excluding VAT each. This year, 3 baths were sold.
Work to do :
- Determine the margin rate generated per hot tub sold.
- Calculate the total margin generated by annual sales.
- If the company wants to encourage purchases by offering a discount of €300 per bath, what will the new margin rate be?
- Project the overall margin if the company manages to sell 20 additional baths at this reduced price.
- Take a position on the launch of an intermediate range with a production cost of €850 and a PV excluding tax of €1.
Proposed correction:
-
Margin rate:
Let’s use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Let's calculate: ((3 – 000) ÷ 1) x 200 = 1%.
The margin rate per bath is 150%. -
Total margin:
Let's use the formula: Unit Margin x Quantity Sold.
Calculation: (3 – 000) x 1 = €200.
The total margin generated is €270. -
New margin rate after reduction:
New PV = 3 – 000 = €300.
New margin rate = ((2 – 700) ÷ 1) x 200 = 1%.
The new margin rate is 125%.
-
Overall margin with 20 additional sales:
New quantity = 150 + 20 = 170.
New overall margin = (2 – 700) x 1 = €200.
With 20 additional sales, the overall margin would be €255. -
Launch of an intermediate range:
Unit margin: 1 – 800 = €850.
Margin rate = ((1 – 800) ÷ 850) x 850 = 100%.
An intermediate range offers a margin rate of 111,76%.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Total margin | Unit margin x Quantity sold |
| New margin rate | ((New PV – HT PA) ÷ HT PA) x 100 |
| New overall margin | (New PV – PA HT) x New quantity sold |
| Intermediate unit margin | New PV HT – PA HT |
Application: Sophie's Delights
States :
Les Délices de Sophie, a bakery chain, analyzes the profitability of its nut breads. The cost of ingredients per loaf is €0,75, and they are sold for €2,50 excluding VAT. The bakery sells 5 each month.
Work to do :
- Calculate the margin rate on nut breads.
- Estimate the monthly margin obtained from these sales.
- If a competitor forces you to lower the selling price to €2,00 excluding VAT, what will the new margin rate be?
- Forecast the overall margin if monthly sales volume increased by 30%.
- Determine a plan to improve profitability by reducing ingredient costs by €0,10.
Proposed correction:
-
Margin rate:
Let’s use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Let's calculate: ((2,50 – 0,75) ÷ 0,75) x 100 = 233,33%.
The margin rate on bread is 233,33%. -
Monthly margin:
Let's use the formula: Unit Margin x Quantity Sold.
Calculation: (2,50 – 0,75) x 5 = €000.
The monthly margin obtained is €8. -
New margin rate if PV drops to €2,00:
New PV excluding VAT = €2,00.
New margin rate = ((2,00 – 0,75) ÷ 0,75) x 100 = 166,67%.
The new margin rate is 166,67%.
-
Overall margin after 30% increase in sales:
New quantity = 5 x 000 = 1,30.
New overall margin = (2,50 – 0,75) x 6 = €500.
A 30% increase would bring the overall margin to €11. -
Plan to improve profitability:
New PA HT = 0,75 – 0,10 = 0,65 €.
New unit margin = 2,50 – 0,65 = €1,85.
With a cost reduction, the unit margin would be €1,85.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Monthly margin | Unit margin x Quantity sold |
| New margin rate | ((New PV HT – PA HT) ÷ PA HT) x 100 |
| New overall margin | Unit Margin x New Quantity Sold |
| New unit margin | PV HT – New PA HT |