In this section:
Application: Heavy Duty Factories
States :
Usines Robustes, a company specializing in the production of automobile parts, wants to improve its profitability. To do this, it needs to calculate the industrial margin on one of its flagship products: transmission parts. The company sells these parts at a price of €250 excluding VAT to its customers. The production cost of each part, including raw materials and labor costs, is €150. The company wants to analyze different sales and production situations in order to optimize its commercial strategy.
Work to do :
- What is the industrial margin per unit sold of the transmission part?
- Calculate the overall margin if the company sells 1 pieces.
- Determine the margin rate for transmission parts.
- What should be the unit cost of production to obtain a unit margin of €120?
- Analyze the impact on the overall margin if the production cost increases by 10% per unit while maintaining a sales volume of 1 pieces.
Proposed correction:
-
The industrial margin per unit sold is the difference between the net selling price and the production cost.
Unit Margin = Selling Price excluding VAT – Production Cost
By replacing, Unit Margin = €250 – €150 = €100
Thus, the industrial margin per unit sold is €100. -
The overall margin is calculated by multiplying the unit margin by the total quantity sold.
Overall Margin = Unit Margin x Quantity Sold
Replacing, Global Margin = €100 x €1 = €000
The overall margin for the sale of 1 pieces is therefore €000. -
The margin rate is calculated using the formula:
Margin Rate = ((PV HT – PA HT) ÷ PA HT) x 100
Replacing, Margin Rate = ((€250 – €150) ÷ €150) x 100 = 66,67%
The margin rate for transmission parts is therefore 66,67%.
-
To obtain a unit margin of €120, we reformulate the unit margin equation:
Unit Margin = Selling Price excluding VAT – Production Cost
120 € = 250 € – Production Cost
Production Cost = €250 – €120 = €130
The unit production cost must be €130 to achieve a unit margin of €120. -
If the cost of production increases by 10%, it becomes:
New Cost = €150 x 1,10 = €165
New Unit Margin = Selling Price excluding VAT – New Cost
New Unit Margin = €250 – €165 = €85
New Global Margin = €85 x 1 = €000
The increase in production cost leads to a decrease in the overall margin to €85, thus affecting profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit Margin | Selling price excluding VAT – Production cost |
| Overall Margin | Unit Margin x Quantity Sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
Application: TechniQuip
States :
TechniQuip is a company that manufactures electronic equipment used in the medical field. After a recent approach to export, the company plans to optimize its costs and margins. It sells its flagship product, a heart monitor, at €600 excluding tax, with a manufacturing cost of €400. The company wants to explore ways to improve profitability by analyzing its industrial margins.
Work to do :
- Calculate the industrial margin per heart monitor sold.
- If TechniQuip sells 500 monitors, what will the overall margin be?
- What is the margin rate on sales of heart monitors?
- Determine the selling price excluding tax required to achieve a unit margin of €250.
- Discuss the implications on overall margin if manufacturing cost drops by 15%.
Proposed correction:
-
The industrial margin per unit is the difference between the selling price excluding tax and the manufacturing cost.
Unit Margin = Selling Price excluding VAT – Manufacturing Cost
By replacing, Unit Margin = €600 – €400 = €200
Thus, the industrial margin per heart monitor is €200. -
The overall margin is obtained by multiplying the unit margin by the total number of monitors sold.
Overall Margin = Unit Margin x Quantity Sold
By replacing, Global Margin = €200 x 500 = €100
The overall margin achieved with 500 sales is €100. -
The margin rate is calculated using the following formula:
Margin Rate = ((PV HT – PA HT) ÷ PA HT) x 100
Replacing, Margin Rate = ((€600 – €400) ÷ €400) x 100 = 50%
The margin rate for monitors is 50%.
-
To achieve a unit margin of €250, the sales price must be adjusted:
Unit Margin = New Selling Price excluding VAT – Manufacturing Cost
250 € = New Sale Price excluding VAT – 400 €
New Sale Price excluding VAT = €250 + €400 = €650
The selling price excluding tax must be €650 for a unit margin of €250. -
If the manufacturing cost drops by 15%, the new cost is:
New Cost = €400 x (1 – 0,15) = €340
New Unit Margin = Selling Price excluding VAT – New Cost
New Unit Margin = €600 – €340 = €260
New Global Margin = €260 x 500 = €130
A 15% reduction in manufacturing costs increases the overall margin to €130, thereby improving profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit Margin | Selling price excluding VAT – Manufacturing cost |
| Overall Margin | Unit Margin x Quantity Sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New Selling Price excluding VAT | Unit Margin + Manufacturing Cost |
Application: Joy Mode
States :
Mode de Joie is a small company that designs children's clothing. With the start of the school year, demand for their line of jackets is growing. Each jacket is sold at €80 excluding VAT, with a production cost of €50. The company wants to evaluate the impact of its sales and costs on its margins and calculate financial projections.
Work to do :
- What is the industrial margin per jacket sold?
- If Mode de Joie sells 700 jackets, what will be the total margin generated?
- Calculate the margin rate achieved by each jacket sold.
- If the selling price is reduced by 10%, what will the new margin rate be?
- Explore the effects on the industrial margin per unit if the cost of production increases by €5.
Proposed correction:
-
The industrial margin is calculated as follows:
Unit Margin = Selling Price excluding VAT – Production Cost
By replacing, Unit Margin = €80 – €50 = €30
The industrial margin per jacket is €30. -
To obtain the overall margin, we use this formula:
Overall Margin = Unit Margin x Quantity Sold
By replacing, Global Margin = €30 x 700 = €21
The sale of 700 jackets generates a total margin of €21. -
To calculate the margin rate, apply the formula:
Margin Rate = ((PV HT – PA HT) ÷ PA HT) x 100
Replacing, Margin Rate = ((€80 – €50) ÷ €50) x 100 = 60%
The margin rate per jacket sold is 60%.
-
If the sale price is reduced by 10%, it becomes:
New Sale Price = €80 x 0,90 = €72
New Margin Rate = ((€72 – €50) ÷ €50) x 100 = 44%
With a 10% reduction in price, the margin rate adjusts to 44%. -
If the production cost increases by €5, the new cost is:
New Cost = €50 + €5 = €55
New Unit Margin = Selling Price excluding VAT – New Cost
New Unit Margin = €80 – €55 = €25
A €5 increase in production cost reduces the unit margin to €25.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit Margin | Selling price excluding VAT – Production cost |
| Overall Margin | Unit Margin x Quantity Sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New Sale Price | Sale Price x % Discount |
Application: Greenhouses & Sky
States :
Serres & Ciel is an innovative company in the agricultural sector that supplies modular greenhouses. With the increase in demand for sustainable solutions, the company wants to estimate its industrial margins in order to optimize its production strategy. The greenhouses are sold at €1 excluding VAT with a production cost of €000 per unit.
Work to do :
- What is the industrial margin for each greenhouse sold?
- Serres & Ciel plans to produce 300 greenhouses. Calculate the overall margin.
- What is the margin rate for each greenhouse?
- If the production cost is reduced by €50, determine the new unit margin.
- Consider the effect on the margin rate if the selling price is increased by 5%.
Proposed correction:
-
The industrial margin per greenhouse is given by:
Unit Margin = Selling Price excluding VAT – Production Cost
By replacing, Unit Margin = €1 – €000 = €700
The industrial margin per greenhouse sold is therefore €300. -
The overall margin is calculated by multiplying the unit margin by the quantity expected to be sold:
Overall Margin = Unit Margin x Quantity Sold
By replacing, Global Margin = €300 x 300 = €90
By producing and selling 300 greenhouses, the overall margin created is €90. -
The margin rate is defined as:
Margin Rate = ((PV HT – PA HT) ÷ PA HT) x 100
Substituting, Margin Rate = ((€1 – €000) ÷ €700) x 700 = 100%
The margin rate for each greenhouse sold is calculated at 42,86%.
-
With a reduction of €50 in production costs, the new cost becomes:
New Cost = €700 – €50 = €650
New Unit Margin = Selling Price excluding VAT – New Cost
New Unit Margin = €1 – €000 = €650
Thus, the new unit margin is €350. -
With a 5% increase in the selling price, the new price is:
New Sale Price = €1 x 000 = €1,05
New Margin Rate = ((€1 – €050) ÷ €700) x 700 = 100%
Increasing the selling price to €1 results in an increase in the margin rate to 050%.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit Margin | Selling price excluding VAT – Production cost |
| Overall Margin | Unit Margin x Quantity Sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New Sale Price | Selling Price x (1 + % Increase) |
Application: Solar Light
States :
Lumière Solaire is a company that manufactures solar kits for self-consumption of electricity. Due to the rise of renewable energies, the company anticipates an increase in sales and wants to evaluate the performance of its industrial margins. Each kit is sold at €750 excluding VAT, costing €500 to produce.
Work to do :
- Calculate the industrial margin per kit sold.
- With the potential sale of 1 kits, determine the overall margin generated.
- What is the margin rate for each solar kit?
- If the selling price is adjusted to €700, what will be the impact on the unit margin?
- Analyze how an 8% drop in production costs would affect the industrial margin.
Proposed correction:
-
The unit margin is calculated as follows:
Unit Margin = Selling Price excluding VAT – Production Cost
By replacing, Unit Margin = €750 – €500 = €250
Each solar kit sold generates a unit margin of €250. -
To obtain the overall margin when 1 kits are sold:
Overall Margin = Unit Margin x Quantity Sold
Replacing, Global Margin = €250 x €1 = €200
The sale of 1 solar kits generates an overall margin of €200. -
The margin rate is calculated using the following formula:
Margin Rate = ((PV HT – PA HT) ÷ PA HT) x 100
Replacing, Margin Rate = ((€750 – €500) ÷ €500) x 100 = 50%
The margin rate per solar kit is therefore 50%.
-
With a new selling price of €700, the new unit margin is:
New Unit Margin = New Selling Price excluding VAT – Production Cost
New Unit Margin = €700 – €500 = €200
The unit margin decreases to €200 with this new price adjustment. -
An 8% reduction in production costs gives a new cost of:
New Cost = €500 x (1 – 0,08) = €460
New Unit Margin = Selling Price excluding VAT – New Cost
New Unit Margin = €750 – €460 = €290
The reduction in production costs increases the unit margin to €290.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit Margin | Selling price excluding VAT – Production cost |
| Overall Margin | Unit Margin x Quantity Sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New Cost | Production Cost x (1 – % Reduction) |
Application: Green Boats
States :
Bateaux Verts, a specialist in the manufacture of ecological sailboats, wants to assess its margins to guide its future production. Each sailboat is sold at €150 excluding tax, with a manufacturing cost of €000. The company must analyze its margins to adjust its commercial strategy in the face of growing demand.
Work to do :
- Determine the unit industrial margin of each sailboat.
- If Bateaux Verts sells 20 sailboats, what will the overall margin be?
- What is the margin rate on each sailboat sold?
- What would be the selling price excluding tax required to double the unit margin?
- Discuss the impact of a manufacturing cost increased by €5 per sailboat on the unit margin.
Proposed correction:
-
The industrial margin per sailboat is given by:
Unit Margin = Selling Price excluding VAT – Manufacturing Cost
By replacing, Unit Margin = €150 – €000 = €110
Each sailboat sold generates a unit margin of €40. -
The overall margin for the sale of 20 sailboats is:
Overall Margin = Unit Margin x Quantity Sold
By replacing, Global Margin = €40 x 000 = €20
The sale of 20 sailboats generates an overall margin of €800. -
The margin rate is calculated as:
Margin Rate = ((PV HT – PA HT) ÷ PA HT) x 100
Substituting, Margin Rate = ((€150 – €000) ÷ €110) x 000 = 110%
The margin rate per sailboat reaches 36,36%.
-
To double the unit margin, the following equation is used:
2 x Unit Margin = New Selling Price excluding VAT – Manufacturing Cost
By replacing, 2 x €40 = New Selling Price excluding VAT – €000
New Sale Price excluding VAT = €80 + €000 = €110
The selling price excluding tax must be €190 to double the unit margin. -
With an additional manufacturing cost of €5, the new cost becomes:
New Cost = €110 + €000 = €5
New Unit Margin = Selling Price excluding VAT – New Cost
New Unit Margin = €150 – €000 = €115
An increase of €5 reduces the unit margin to €000 per sailboat.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit Margin | Selling price excluding VAT – Manufacturing cost |
| Overall Margin | Unit Margin x Quantity Sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New Sale Price | 2 x Unit Margin + Manufacturing Cost |
Application: Urban Bikes
States :
Vélos Urbains is a company that produces electric bicycles for the city. To cope with the growing popularity of cycling in urban areas, the company wants to evaluate its financial performance by analyzing its industrial margins. Each bicycle is sold at a price of €1 excluding VAT and costs €500 to produce.
Work to do :
- How is the industrial margin calculated per bicycle sold?
- Calculate the overall margin for selling 350 bicycles.
- Determine the unit margin rate for a bicycle.
- What price adjustment would be necessary to increase the unit margin by 25%?
- Consider the impact on the industrial margin if production costs decrease by 10%.
Proposed correction:
-
The industrial margin per bicycle is calculated by:
Unit Margin = Selling Price excluding VAT – Production Cost
By replacing, Unit Margin = €1 – €500 = €1
The margin per bike sold is therefore €400. -
For the overall margin on the sale of 350 bicycles:
Overall Margin = Unit Margin x Quantity Sold
By replacing, Global Margin = €400 x 350 = €140
The sale of 350 bicycles generates an overall margin of €140. -
The unit margin rate is:
Margin Rate = ((PV HT – PA HT) ÷ PA HT) x 100
Substituting, Margin Rate = ((€1 – €500) ÷ €1) x 100 = 1%
The margin rate per unit is 36,36%.
-
To increase the unit margin by 25%:
New Unit Margin = Old Unit Margin x 1,25
By replacing, New Unit Margin = €400 x 1,25 = €500
New Selling Price excluding VAT = New Unit Margin + Production Cost
New Selling Price excluding VAT = €500 + €1 = €100
The selling price must be adjusted to €1 to increase the margin by 600%. -
If production costs decrease by 10%, the new cost is:
New Cost = €1 x (100 – 1) = €0,10
New Unit Margin = Selling Price excluding VAT – New Cost
New Unit Margin = €1 – €500 = €990
The 10% reduction in production costs brings the unit margin to €510 per bicycle.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit Margin | Selling price excluding VAT – Production cost |
| Overall Margin | Unit Margin x Quantity Sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New Unit Margin | Old Unit Margin x (1 + % Increase) |
| New Sale Price | New Unit Margin + Production Cost |
Application: Contemporary Furnishing
States :
Ameublement Contemporain specializes in modern wooden furniture and wants to optimize its industrial margins. Each table and chair set is sold at €400 excluding VAT, while the production cost is €280. With the growing craze for interior design, the company wants to analyze the profitability of its current model.
Work to do :
- What is the amount of the industrial margin per set sold?
- For a sales volume of 600 sets, calculate the overall margin.
- What is the margin rate per furniture set?
- If the company wants to increase the unit margin by €40, what should the selling price be?
- Evaluate the impact of a production contract variation resulting in a 10% increase in production costs.
Proposed correction:
-
The industrial margin per unit is calculated as follows:
Unit Margin = Selling Price excluding VAT – Production Cost
By replacing, Unit Margin = €400 – €280 = €120
The industrial margin per set sold is €120. -
To estimate the overall margin on 600 sets sold:
Overall Margin = Unit Margin x Quantity Sold
By replacing, Global Margin = €120 x 600 = €72
The total margin for 600 sets sold therefore amounts to €72. -
The margin rate per set is given by:
Margin Rate = ((PV HT – PA HT) ÷ PA HT) x 100
Replacing, Margin Rate = ((€400 – €280) ÷ €280) x 100 ? 42,86%
The margin rate per set of furniture is 42,86%.
-
To increase the unit margin by €40:
New Unit Margin = Old Unit Margin + €40
New Selling Price excluding VAT = New Unit Margin + Production Cost
By replacing, New Selling Price excluding VAT = (120 € + 40 €) + 280 € = 440 €
A selling price of €440 would guarantee a unit margin increase of €40. -
If production costs increase by 10%, the new cost is as follows:
New Cost = €280 x 1,10 = €308
New Unit Margin = Selling Price excluding VAT – New Cost
New Unit Margin = €400 – €308 = €92
The increase in costs reduces the unit margin to €92, potentially impacting profits.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit Margin | Selling price excluding VAT – Production cost |
| Overall Margin | Unit Margin x Quantity Sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New Unit Margin | Old Unit Margin + Increase |
| New Cost | Production Cost x (1 + % Increase) |
Application: Gourmet Bio
States :
Gourmet Bio offers a range of organic ready meals. The company must calculate its industrial margins to assess the profitability of its business model. The selling price of the meals per unit is €15 excluding VAT, with a production cost of €9. The objective is to better understand the figures to manage growth.
Work to do :
- How is the industrial margin calculated per dish sold?
- What is the overall margin if Gourmet Bio sells 5 dishes?
- Determine the margin rate for each organic dish.
- What price should be set for a unit margin increased by €2,5?
- Analyze the consequences if production costs increase by €0,50 per dish.
Proposed correction:
-
The industrial margin per dish is determined by:
Unit Margin = Selling Price excluding VAT – Production Cost
By replacing, Unit Margin = €15 – €9 = €6
Each dish sold generates a unit margin of €6. -
For the overall margin for 5 dishes:
Overall Margin = Unit Margin x Quantity Sold
Replacing, Global Margin = €6 x €5 = €000
With 5 dishes, Gourmet Bio generates an overall margin of €000. -
The margin rate for each dish is then calculated as follows:
Margin Rate = ((PV HT – PA HT) ÷ PA HT) x 100
Replacing, Margin Rate = ((€15 – €9) ÷ €9) x 100 = 66,67%
Each dish benefits from a margin rate of 66,67%.
-
To obtain an increased unit margin of €2,5, the calculation is as follows:
New Unit Margin = Old Unit Margin + €2,5
New Selling Price excluding VAT = New Unit Margin + Production Cost
New Sale Price excluding VAT = €8,5 + €9 = €17,5
For a margin increase of €2,5, the price should be €17,5. -
If the production cost increases by €0,50:
New Cost = €9 + €0,50 = €9,50
New Unit Margin = Selling Price excluding VAT – New Cost
New Unit Margin = €15 – €9,50 = €5,50
This increase reduces the unit margin to €5,50, which potentially affects profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit Margin | Selling price excluding VAT – Production cost |
| Overall Margin | Unit Margin x Quantity Sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New Unit Margin | Old Unit Margin + Increase |
| New Cost | Production Cost + Increase |