Summary
Application: Les Délices Bakery
States :
The bakery "Les Délices" located in Lyon wants to calculate its financial indicators to better optimize its margins. It sells a variety of breads and pastries. Wholemeal bread has a unit purchase price of €1 excluding VAT and a sales price of €1,5 excluding VAT. The bakery would also like to inventory its costs to control its working capital.
Work to do :
- Calculate the unit margin for each wholemeal loaf.
- Determine the margin rate for wholemeal bread.
- Calculate the markup rate of wholemeal bread.
- If the bakery sells 10 wholemeal loaves per month, what is the overall margin?
- Analyze the impact of a change in the selling price to €1,8 excluding VAT on the markup rate, justifying your answer.
Proposed correction:
-
The unit margin is calculated as follows: Unit margin = PV HT – PA HT. Substituting the values, we have: €1,5 – €1 = €0,5. The unit margin for each wholemeal loaf is €0,5.
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The margin rate is given by: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100. Replacing the values: ((1,5 € – 1 €) ÷ 1 €) x 100 = 50%. The margin rate for wholemeal bread is 50%.
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The markup rate is determined by: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100. Replacing the values: ((€1,5 – €1) ÷ €1,5) x 100 = 33,33%. The markup rate for wholemeal bread is 33,33%.
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The overall margin is calculated as follows: Overall margin = Unit margin x quantity sold. Substituting the values, we obtain: €0,5 x 10 = €000. The overall margin on wholemeal bread is €5.
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If the selling price is changed to €1,8 excluding VAT, let's recalculate the markup rate: Markup rate = ((€1,8 – €1) ÷ €1,8) x 100 = 44,44%. The increase in the selling price would result in a markup rate of 44,44%, which improves the unit profitability of the product.
Formulas Used:
| Title | Formulas |
|---|---|
| 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: TechSolutions SARL
States :
TechSolutions SARL is a company specializing in computer maintenance. It is currently examining the efficiency of its hardware repair services to improve its profitability. A maintenance service costs €50 excluding VAT and is sold for €80 excluding VAT. The company also wants to assess its ability to cover its costs in the short term.
Work to do :
- Calculate the unit margin for the maintenance service.
- Determine the margin rate for this service.
- Calculate the corresponding markup rate.
- What would be the overall margin for 500 interventions?
- Evaluate the effect of reducing the purchase cost to €45 excluding VAT on the margin rate, with justification.
Proposed correction:
-
The unit margin is determined by: Unit margin = PV HT – PA HT. Using the data, we have: €80 – €50 = €30. The unit margin for the maintenance service is then €30.
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The margin rate is given by: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100. Inserting the values: ((80 € – 50 €) ÷ 50 €) x 100 = 60%. The margin rate for the maintenance service is 60%.
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We calculate the markup rate as follows: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100. Therefore, ((€80 – €50) ÷ €80) x 100 = 37,5%. The associated markup rate is therefore 37,5%.
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The overall margin is calculated as follows: Overall margin = Unit margin x quantity sold. By substituting the values, we obtain: €30 x €500 = €15. The overall margin of the interventions would then be €000.
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A reduction in cost to €45 excluding VAT changes the margin rate as follows: Margin rate = ((€80 – €45) ÷ €45) x 100 = 77,78%. The reduction in purchasing costs increases the margin rate to 77,78%, thereby increasing profitability per intervention.
Formulas Used:
| Title | Formulas |
|---|---|
| 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: ModeInvest Inc.
States :
ModeInvest Inc. is a high-end women's clothing company. Currently, it wants to evaluate the profitability of a dress sold in stores. The purchase cost is €120 and the sale price is €200 excluding VAT. The company also plans to optimize its supplies and working capital.
Work to do :
- Calculate the unit margin for the dress.
- Determine the margin rate for this product.
- Calculate the associated markup rate.
- If 2 dresses are sold, what is the total margin generated?
- Asking for your opinion, analyze how an increase in the purchase price to €130 would affect ModeInvest's margin rate.
Proposed correction:
-
The unit margin is given by: Unit margin = PV HT – PA HT. Substituting the values, we have: €200 – €120 = €80. The unit margin is €80.
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The margin rate is calculated as follows: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100. With the data: ((200 € – 120 €) ÷ 120 €) x 100 = 66,67%. The margin rate for the dress is 66,67%.
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The markup rate is given by: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100. Applying the figures, we get: ((€200 – €120) ÷ €200) x 100 = 40%. The markup rate for this product is 40%.
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For the total margin, we use: Total margin = Unit margin x quantity sold. We thus obtain: €80 x €2 = €000. The total margin for dresses sold is €160.
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An increase in the purchase cost to €130 affects the margin rate/calculated by: Margin rate = ((€200 – €130) ÷ €130) x 100 = 53,85%. The increase in the purchase cost reduces the margin rate to 53,85%, which significantly impacts the profitability of each dress.
Formulas Used:
| Title | Formulas |
|---|---|
| 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: EcoHealth Laboratories
States :
Laboratoires ÉcoSanté is a pharmaceutical company engaged in the development of natural products. It wants to evaluate the performance of a new anti-aging cream. The production cost is €40 per unit and it is sold at €65 excluding VAT. The company is also studying its margins to cope with cost pressure.
Work to do :
- Calculate the unit margin of the anti-aging cream.
- Determine the margin rate for this product.
- Calculate the markup rate for this product.
- If 1 creams are sold, what is the margin generated?
- Criticize how a drop in the selling price to €60 excluding VAT would affect the margin rate and profitability.
Proposed correction:
-
The unit margin is defined by: Unit margin = PV HT – PA HT. Using the values: €65 – €40 = €25. The unit margin for anti-aging cream is €25.
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The margin rate is calculated as follows: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100. Therefore: ((€65 – €40) ÷ €40) x 100 = 62,5%. The margin rate is 62,5%.
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The markup rate is calculated by: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100. This gives: ((€65 – €40) ÷ €65) x 100 = 38,46%. The markup rate of the anti-aging cream is 38,46%.
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The margin will be: Overall margin = Unit margin x quantity sold. Thus, €25 x €1 = €500. The margin generated is therefore €37.
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A decrease in the selling price to €60 excluding VAT changes the calculation of the margin rate: Margin rate = ((€60 – €40) ÷ €40) x 100 = 50%. This price reduction causes the margin rate to drop to 50%, thus reducing the profit per unit, which can make the company less competitive on this specific product.
Formulas Used:
| Title | Formulas |
|---|---|
| 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: Gourmet Caterer
States :
Gourmet Traiteur, a gourmet caterer known for its exclusive events, wants to analyze the profitability of its convivial dishes. A single dish is prepared at a cost of €12 excluding VAT and sold for €18 excluding VAT. The objective is to optimize its margins and improve its revenues.
Work to do :
- Calculate the unit margin for each dish.
- Determine the margin rate for this dish.
- Calculate the markup rate.
- If 3 dishes are sold, what is the total margin?
- Comment on how increasing the selling price to €20 excluding VAT influences the margin rate.
Proposed correction:
-
The unit margin is: Unit margin = PV HT – PA HT. We calculate: €18 – €12 = €6. Each dish offers a unit margin of €6.
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The margin rate is given by: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100. Thus: ((18 € – 12 €) ÷ 12 €) x 100 = 50%. The margin rate of the dish is 50%.
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For the markup rate, we have: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100. This gives: ((18 € – 12 €) ÷ 18 €) x 100 = 33,33%. The markup rate is therefore 33,33%.
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The total margin is: Total margin = Unit margin x quantity sold. Thus: €6 x €3 = €000. The total margin is €18.
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Increasing the selling price to €20 excluding VAT changes the margin rate: Margin rate = ((€20 – €12) ÷ €12) x 100 = 66,67%. Increasing the selling price drives the margin rate to 66,67%, maximizing profits while providing the flexibility to lower prices if necessary.
Formulas Used:
| Title | Formulas |
|---|---|
| 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: Golden Letters Editions
States :
Éditions Lettres d'Or, a publishing house, wants to explore the profitability of a new book collection. The production cost per book is €8 excluding VAT and each book is sold for €15 excluding VAT. The company aims to maximize its revenue by optimizing its margins.
Work to do :
- Calculate the unit margin for each book.
- Determine the margin rate for this product.
- Calculate the markup rate for books.
- What is the overall margin if 10 books are sold?
- Discuss the effects of a price reduction to €12 excluding VAT on the mark-up rate.
Proposed correction:
-
Unit margin = PV excluding VAT – PA excluding VAT, i.e.: €15 – €8 = €7. The unit margin for each book is therefore €7.
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The margin rate is: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100. Thus: ((15 € – 8 €) ÷ 8 €) x 100 = 87,5%. The margin rate of the book is 87,5%.
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Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100, or: ((15 € – 8 €) ÷ 15 €) x 100 = 46,67%. The markup rate is 46,67%.
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The overall margin is: Overall margin = Unit margin x quantity sold. We get: €7 x 10 = €000. The margin for the 70 books is €000.
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With a reduction in the selling price to €12 excluding VAT, the markup rate becomes: Markup rate = ((€12 – €8) ÷ €12) x 100 = 33,33%. This reduction reduces the markup rate to 33,33%, which reduces profitability per unit but could make the product more affordable for the market.
Formulas Used:
| Title | Formulas |
|---|---|
| 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: Organic Cooking
States :
Cuisine Bio, a meal delivery service based on organic products, wants to analyze the profitability of one of its flagship dishes. The cost of the ingredients is €5 excluding VAT per dish, while the dish is sold at €12 excluding VAT. The company wants to optimize its costs and improve its margins.
Work to do :
- Calculate the unit margin for each dish.
- Determine the margin rate for this dish.
- What is the corresponding markup rate?
- If 750 dishes are sold, what is the total margin?
- Discuss the effect of increasing the cost of ingredients to €6 on the unit margin.
Proposed correction:
-
The unit margin is: Unit margin = PV HT – PA HT. This gives: €12 – €5 = €7. The unit margin for each dish is €7.
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The margin rate is calculated by: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100. That is: ((12 € – 5 €) ÷ 5 €) x 100 = 140%. Thus, the margin rate of the dish is 140%.
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For the markup rate, the formula is: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100. Which gives: ((12 € – 5 €) ÷ 12 €) x 100 = 58,33%. The markup rate is 58,33%.
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Overall margin = Unit margin x quantity sold. By calculation: €7 x 750 = €5. The margin for these 250 dishes is €750.
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Increasing the cost of ingredients to €6 changes the unit margin: Unit margin = €12 – €6 = €6. This increase reduces the unit margin from €7 to €6, negatively impacting profitability per dish.
Formulas Used:
| Title | Formulas |
|---|---|
| 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: Art & Design Concept
States :
Art & Design Concept, an interior design company, is looking to analyze the profitability of a new collection of vases. The cost of manufacturing a vase is €15 and it is sold for €30 excluding VAT. The company wants to ensure that its margins allow for sustainable growth.
Work to do :
- Calculate the unit margin on each vase.
- Determine the margin rate for a vase.
- Calculate the markup rate of the vases.
- What is the overall margin if 1 vases are sold?
- If the manufacturing cost is reduced to €12, how does this affect the margin rate?
Proposed correction:
-
The unit margin is calculated by: Unit margin = PV excluding tax – PA excluding tax. This gives: €30 – €15 = €15. Each vase generates a margin of €15.
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The margin rate is determined by: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100. That is: ((€30 – €15) ÷ €15) x 100 = 100%. Therefore, the margin rate is 100%.
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The markup rate is obtained by: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100. Which gives: ((€30 – €15) ÷ €30) x 100 = 50%. The markup rate is 50%.
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The overall margin is calculated as follows: Overall margin = Unit margin x quantity sold. By substitution: €15 x €1 = €200. Therefore, the margin is €18.
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Reducing the manufacturing cost to €12 changes the margin rate: Margin rate = ((€30 – €12) ÷ €12) x 100 = 150%. This reduction increases the margin rate to 150%, improving the unit profitability of each vase.
Formulas Used:
| Title | Formulas |
|---|---|
| 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: FitnessPro Equipment
States :
FitnessPro Equipements is a company specializing in the sale of fitness equipment. They evaluate the profitability of a treadmill whose purchase cost is €600 excluding VAT, with a sale price of €900 excluding VAT. The company wants to optimize its margins to strengthen its position on the market.
Work to do :
- Calculate the unit margin for the treadmill.
- Determine the margin rate for this equipment.
- What is the markup rate for this product?
- What is the overall margin for 200 rugs sold?
- Consider the impact of a promotion reducing the sale price to €800 excluding VAT on the mark-up rate.
Proposed correction:
-
Unit margin = PV excluding tax – PA excluding tax, therefore: €900 – €600 = €300. Each treadmill generates a unit margin of €300.
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The margin rate is obtained by: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100. That is: ((€900 – €600) ÷ €600) x 100 = 50%. Thus, the margin rate is 50%.
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For the markup rate: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100. Then: ((€900 – €600) ÷ €900) x 100 = 33,33%. The markup rate is 33,33%.
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The overall margin is: Overall margin = Unit margin x quantity sold. So, €300 x 200 = €60. The overall margin for these sales is €000.
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With a promotion of €800 excluding VAT, the markup rate becomes: Markup rate = ((€800 – €600) ÷ €800) x 100 = 25%. This promotion reduces the markup rate to 25%, implying a lower unit profitability, generally adapted to accelerate sales.
Formulas Used:
| Title | Formulas |
|---|---|
| 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 |