Welcome to this article on exercises on business calculations and more specifically on how to calculate the sales price including tax. You will find here no less than 11 detailed corrected management exercises on business calculations for Operational Management.
At the end of this article, you will know how to calculate the sales price including tax in business calculations without any worries.
Here is a table that summarizes the formulas used in the article:
| Application | Formulas and Calculations |
|---|---|
| Sun of the Orient | – PV HT = PA HT + (PA HT x Margin rate) |
| – VAT = PV HT x VAT rate | |
| – PV incl. VAT = PV excl. VAT + VAT | |
| The Delights of Paris | – PV HT = PA HT + (PA HT x Desired margin / 100) |
| – VAT = PV HT x VAT rate | |
| – PV incl. VAT = PV excl. VAT + VAT | |
| – Margin rate = (PV HT – PA HT) / PA HT x 100 | |
| – Mark rate = (PV HT – PA HT) / PV HT x 100 | |
| Claude's delights | – PV HT = PA HT + (PA HT x Margin rate / 100) |
| – Mark rate = (PV HT – PA HT) / PV HT x 100 | |
| – PV TTC = PV HT x (1 + (VAT rate / 100)) | |
| – PV HT = PA HT / (1 – (Market rate / 100)) | |
| DynamicTools | – PV HT = PA HT + (PA HT x Margin rate) |
| – VAT = PV HT x VAT rate | |
| – PV incl. VAT = PV excl. VAT + VAT | |
| – Margin rate = ((PV HT – PA HT) / PA HT) x 100 | |
| BioGreen | – PV HT = PA HT x (1 + Margin rate / 100) |
| – VAT = PV HT x VAT rate / 100 | |
| – PV incl. VAT = PV excl. VAT + VAT | |
| – For the 45% margin rate, repeat the same steps with 45% instead of 40% | |
| – Total including tax for 500 bottles = PV including tax x Number of bottles sold | |
| Nath's Workshop | – PV HT = Production cost + (Production cost x Desired margin / 100) |
| – VAT = PV HT x VAT rate / 100 | |
| – PV incl. VAT = PV excl. VAT + VAT | |
| – New PV including tax after reduction = PV including tax – (PV including tax x Reduction / 100) | |
| Lucia's Sweets | – PV HT = PA HT / (1 – Mark rate) |
| – VAT = PV HT x VAT rate / 100 | |
| – PV incl. VAT = PV excl. VAT + VAT | |
| – Purchase costs and margin rates influence the sales price including tax | |
| Sophie's Sweets | – PA HT per baguette = PA HT / Number of baguettes |
| – Unit margin = PA HT per baguette x Margin rate | |
| – PV HT per baguette = PA HT per baguette + Unit margin | |
| – VAT per baguette = PV excluding VAT per baguette x VAT rate | |
| – PV TTC per baguette = PV HT per baguette + VAT per baguette | |
| – PV including tax for 100 baguettes = PV including tax per baguette x 100 | |
| TechNova | – Cost price = PA excluding tax + Transport costs + Storage costs |
| – Desired margin = PA HT x Margin rate | |
| – PV HT = Cost price + Desired margin | |
| – VAT = PV HT x VAT rate | |
| – PV incl. VAT = PV excl. VAT + VAT | |
| Stone's Delights | – Unit margin = PA HT x Margin rate |
| – PV HT = PA HT + Unit margin | |
| – VAT = PV HT x VAT rate | |
| – PV incl. VAT = PV excl. VAT + VAT |
In this section:
Oriental Sun Application
States :
You are a management assistant at "Soleil d'Orient", a boutique specializing in the sale of oriental handicrafts. The company has just acquired a batch of hand-embroidered scarves from Morocco. The unit purchase cost excluding tax for the scarves is €15. The margin rate that the company wishes to achieve is 40%.
The store manager, not having a complete grasp of the financial aspects, asks you to establish the sales price excluding tax (HT) and the sales price including all taxes (TTC) of these scarves, knowing that the applicable VAT rate is 20%.
Work to do :
- How can you calculate the selling price excluding VAT?
- What is the selling price excluding tax of the scarf?
- How is the amount of VAT determined?
- How much is VAT on a scarf?
- What is the selling price including tax of the scarf?
Proposed correction:
Answer 1: The selling price excluding VAT can be calculated using the formula: Selling price excluding VAT = Purchase price excluding VAT + (Purchase price excluding VAT x Margin rate).
The margin rate is the difference between the selling price and the purchase price as a percentage of the purchase price.
Answer 2: Let’s use the formula to determine the selling price excluding VAT.
So, the selling price excluding tax will be €15 + (€15 x 40%) = €15 + €6 = €21.
Answer 3: The amount of VAT is determined by multiplying the pre-tax sales price by the applicable VAT rate.
Answer 4: The amount of VAT for a scarf is: €21 x 20% = €4,20.
Answer 5: Finally, the sales price including tax is obtained by adding the sales price excluding tax and the VAT amount. That is to say: €21 + €4,20 = €25,20.
Thus, the selling price including tax of the embroidered scarf is €25,20.
The Delights of Paris App
States :
The company Les Délices de Paris, which specializes in the sale of French gastronomic products, wants to set the sales price including tax for its new products. We will use the following data for the exercise:
– Purchase price excluding tax (PA HT): €20
– Desired margin: 15% on the purchase price excluding taxes
– VAT rate: 20%
Work to do :
1. What will be the sales price excluding tax (SVP) of the product?
2. How much VAT will there be?
3. What will be the sales price including all taxes (PV TTC)?
4. What is the margin rate on the products?
5. What is the markup rate on the products?
Proposed correction:
1. The sales price excluding tax (PV HT) is calculated by adding the margin to the purchase price excluding tax.
With the figures, this gives: PA HT + (PA HT x (15/100)) = €20 + €3 = €23.
2. VAT is applied to the sales price excluding tax and is calculated by multiplying the PV excluding tax by the VAT rate.
We will therefore have: PV HT x 20% = €23 x 20% = €4,6.
3. The sales price including all taxes (PV TTC) is calculated by adding VAT to the PV excluding tax.
In our case, this gives: PV HT + VAT = €23 + €4,6 = €27,6.
4. The margin rate is calculated using the following formula: (PV HT – PA HT) / PA HT x 100.
For the product in question, this gives: [(€23 – €20) / €20] x 100 = 15%.
5. The markup rate is calculated using the following formula:
[(PV HT – PA HT) / PV HT] x 100.
For our product, this gives: [(€23 – €20) / €23] x 100 = 13,04%.
Application Claude's Delights
States :
Claude is the owner of the company "Les délices de Claude". He sells homemade baked goods and pastries. He recently launched a new collection of pastries and wants to determine the selling price, knowing that the VAT applied is 5,5%.
1. Claude bought the ingredients to make a chocolate mousse for €3 excluding tax, he wants to apply a margin rate of 30% to establish his sales price excluding tax (SRP excluding tax).
2. Next, he also needs to know the markup rate for this chocolate mousse.
3. In addition, he wants to know the sales price including all taxes (PV TTC).
4. For his apple pie, Claude bought the ingredients for a total cost of €4 excluding VAT. He is aiming for a markup rate of 30%. What would be the corresponding PV excluding VAT?
5. Finally, Claude would like to know the selling price including tax of his apple pie.
Work to do :
1. How to calculate the sales price excluding tax (SRP HT) of chocolate mousse?
2. What would be the markup rate for this chocolate mousse?
3. Calculate the sales price including all taxes (PV TTC) of the chocolate mousse.
4. How to determine the net PV of the apple pie from the target markup rate?
5. Calculate the selling price including tax of the apple pie.
Proposed correction:
1. The PV HT of the chocolate mousse would be calculated using the formula:
PV HT = PA HT + (PA HT x margin rate / 100)
Or PV HT = €3 + (€3 x (30 / 100)), which gives a PV HT of €3,90.
2. The markup rate is calculated using the formula:
Mark rate = [(PV HT – PA HT) / PV HT)] x 100
Which gives: markup rate = ((€3,9 – €3) / €3,9) x 100, or a markup rate of approximately 23,08%.
3. The VAT-inclusive PV for chocolate mousse is calculated using the formula:
PV including VAT = PV excluding VAT x [1 + (VAT rate / 100)]
i.e. PV including tax = €3,9 x [(1 + (5,5 / 100)], which gives a PV including tax of €4,11 including tax.
4. From the target markup rate, we can calculate the net sales value of the apple pie using the formula:
PV HT = PA HT / (1 – (brand rate / 100))
or PV HT = €4 / (1 – (30 / 100)), which gives a PV HT of approximately €5,71.
5. Finally, the sales price including tax of the apple pie is calculated in the same way as before with the formula:
PV including VAT = PV excluding VAT x (1 + (VAT rate / 100)).
We therefore have: PV including tax = €5,71 x (1 + (5,5 / 100)), which gives a PV including tax of approximately €6,02 including tax.
Dynamic Tools Application
States :
Simon is the owner of Dynamic Tools, a company that sells DIY tools. Simon buys his products from a supplier located in China to resell them in France.
For a hammer, the purchase price excluding tax (PA HT) is €8 and Simon wants to obtain a margin rate of 30%. It should be noted that VAT in France is 20%.
Work to do :
1. Determine the sales price excluding tax (PV HT)
2. Calculate the VAT amount.
3. Determine the sales price including all taxes (PV TTC).
4. What is the margin rate and how is it calculated?
5. Why is the VAT rate important for calculating the VAT-inclusive PV?
Proposed correction:
1. To determine the sales price excluding tax (PV HT), we use the formula:
PV HT = PA HT + (PA HT x margin rate).
So, PV HT = €8 + (30% of €8) or €8 + €2,4 = €10,4.
2. The amount of VAT is calculated using the formula:
VAT amount = PV excluding VAT x VAT rate.
So, VAT amount = €10,4 x 20% = €2,08.
3. To determine the sales price including all taxes (PV TTC), we apply the formula:
PV including tax = PV excluding tax + VAT amount.
So, PV including tax = €10,4 + €2,08 = €12,48.
4. The margin rate is the percentage of profit that the company makes in relation to the purchase price. It is calculated using the formula: Margin rate = ((PV HT – PA HT) / PA HT) x 100). In our case, this gives: ((10,4 € – 8 €) / 8 €) x 100 = 30%.
5. The VAT rate (Value Added Tax) is the percentage of tax that the company must pay to the state on the added value that it creates. It is important for calculating the PV including VAT because it allows to determine the share of tax to add to the PV excluding VAT to obtain the total amount that the buyer will have to pay.
BioGreen Application
States :
The company "BioGreen", which specializes in the sale of organic products, has just received a new delivery of fresh orange juice. The purchase price excluding tax (HT) of each bottle of juice is €2,50.
The company's management wants to determine the sales price including tax for this product, applying a margin rate of 40%. The current VAT rate is 20%.
Work to do :
1. Determine the selling price excluding tax (PV excluding tax) of each bottle of juice.
2. Calculate the amount of VAT per bottle of juice.
3. Deduct the sales price including tax (PV TTC) for each bottle of juice.
4. What would be the sales price including tax if the margin rate is 45%?
5. Estimate the total sales amount including tax if BioGreen sells 500 bottles.
Proposed correction:
1. The selling price excluding tax is calculated using the formula: PV excluding tax = PA excluding tax x (1 + Margin rate / 100)
Substituting the values, we obtain: PV HT = €2,50 x (1 + 40 / 100) = €3,50
2. The amount of VAT per bottle of juice is calculated using the formula:
VAT = PV HT x VAT rate / 100
With the figures, we obtain: VAT = €3,50 x 20/100 = €0,70
3. The sales price including tax is calculated by adding the sales price excluding tax and the amount of VAT.
That is: PV TTC = PV HT + VAT, which gives: PV TTC = €3,50 + €0,70 = €4,20
4. If the margin rate is 45%, we recalculate the PV HT: PV HT = €2,50 x (1 + 45 / 100) = €3,625.
We then recalculate the VAT: VAT = €3,625 x 20/100 = €0,725.
Finally, we obtain the PV including tax by adding the PV excluding tax and the VAT:
PV including tax = €3,625 + €0,725 = €4,35
5. If BioGreen sells 500 bottles, the total sales amount including tax would be:
Total incl. VAT = PV incl. VAT x Quantity sold
So: Total including tax = €4,20 * €500 = €2.
Nath's Workshop Application
States :
Nathalie is the owner of "L'Atelier de Nath", a handmade jewelry boutique. For each of her creations, she must calculate the sales price including tax that she will offer to her customers, taking into account her production costs, her desired margin and the current VAT rate.
In the exercise of her responsibilities, she shares with you her financial data for an earring that she has just designed:
– Production cost (excluding tax): €10
– Desired margin: 40% on the production cost
– VAT rate: 20%
Work to do :
1. What is the purchase price excluding tax of this earring?
2. How to calculate the sales price excluding tax?
3. How to determine the amount of VAT to add?
4. What will be the selling price including tax of the earring?
5. If Nathalie reduces her sales price including tax by 15%, what will the new sales price including tax be?
Proposed correction:
1. The purchase price excluding tax of the earring is the production cost indicated by Nathalie, i.e. €10.
2. To calculate the sales price excluding tax, we must add the desired margin of 40% to the production cost.
So the sales price excluding tax = Production Cost + (Production Cost x Desired Margin / 100). Which gives: €10 + (€10 x 40/100) = €14.
3. To determine the amount of VAT to add, the VAT rate must be applied to the sales price excluding tax.
So the amount of VAT = Selling price excluding VAT x VAT rate / 100. Which gives: €14 x 20/100 = €2,80.
4. The sales price including tax will then be the sales price excluding tax plus the amount of VAT.
So the sales price including tax = Sales price excluding tax + VAT amount. Which gives: €14 + €2,80 = €16,80.
5. If Nathalie reduces her sales price including tax by 15%, the new sales price including tax = Sales price including tax – (Sales price including tax x Reduction / 100).
Which gives: €16,80 – (€16,80 x 15/100) = €14,28.
Lucia's Sweets Application
States :
You are a financial manager of the company "Les Douceurs de Lucia", a company specializing in the sale of bakery products. You manage a variety of products with different purchasing costs and margin levels. You want to calculate the sales price including tax for each product in order to guarantee the financial profitability of the company.
The information regarding the bakery products is as follows:
1. Traditional baguette: Purchase price excluding tax €0,35, desired mark-up rate: 70%
2. Butter croissant: Purchase price excluding tax €0,40, desired mark-up rate: 80%
3. Apple tartlet: Purchase price excluding VAT €1,00, desired mark-up rate: 60%
4. Chocolate éclair: Purchase price excluding tax €1,50, desired mark-up rate: 75%
For these products, a VAT rate of 5,5% must be applied.
Work to do :
1. What is the selling price excluding VAT of each product?
2. How do you calculate the selling price excluding VAT from the purchase price excluding VAT and the desired markup rate?
3. What is the sales price including tax of each product?
4. How is the sales price including tax calculated from the sales price excluding tax and the VAT rate?
5. How do fluctuations in purchasing costs and margin rates influence the sales price including tax?
Proposed correction:
1. The selling price excluding tax of each product is calculated using the formula:
PV HT = PA HT / (1 – Mark rate).
Which give :
– Traditional baguette: €0,35 / (1-0,7) = €1,17
– Butter croissant: €0,40 / (1-0,8) = €2,00
– Apple tartlet: €1,00 / (1-0,6) = €2,5
– Chocolate éclair: €1,50 / (1-0,75) = €6,00
2. The net selling price is calculated from the net purchase price and the markup rate by dividing the purchase price by subtracting 1 and the markup rate. This allows the desired commercial margin to be included on the product.
3. The sales price including VAT is obtained by adding VAT to the sales price excluding VAT. Which gives:
– Traditional baguette: €1,17 x (1 + 5,5/100) = €1,23
– Butter croissant: €2,00 x (1 + 5,5/100) = €2,11
– Apple tartlet: €2,50 x (1 + 5,5/100) = €2,64
– Chocolate éclair: €6,00 x (1 + 5,5/100) = €6,33
4. The sales price including tax is calculated by adding the VAT amount (which is the product of the PVT excluding tax and the VAT rate) to the sales price excluding tax. This allows the company to comply with its tax obligations.
5. The fluctuation of purchasing costs and margin rates influences the sales price including tax in several ways:
– An increase in the purchase price will increase the selling price excluding VAT, which in turn increases the selling price including VAT.
– An increase in the markup rate will also increase the selling price excluding VAT and consequently the selling price including VAT.
To maintain the same selling price when the purchase cost increases, the company would have to reduce its margin rate.
Sophie's Sweets App
States :
You are the manager of a bakery shop called "Les Douceurs de Sophie". You have purchased a new type of organic flour to make your baguettes. The purchase price excluding tax of this flour is €1,00 per kilogram. You have decided to prepare 100 baguettes with one kilogram of flour.
Work to do :
1. Calculate the Purchase Price excluding tax (PA HT) per baguette.
2. Estimate a margin rate of 30% on the HT PA per baguette, calculate the Sales Price excluding tax (PV HT).
3. Calculate the amount of VAT at a rate of 5,5%, applied to the PV excluding tax per baguette.
4. Calculate the Sales Price Including All Taxes (SRP TTC) for a baguette.
5. What would be the VAT-inclusive price for 100 baguettes prepared with one kilogram of flour?
Proposed correction:
1. The PA HT per baguette is €1,00 / 100 baguettes = €0,01 per baguette.
2. The margin rate is calculated by the formula ((PV HT – PA HT) / PA HT) x 100).
By reversing the formula, we obtain PV HT = PA HT x (1 + (margin rate / 100))
so: €0,01 x (1 + (30 / 100)) = €0,01 x 1,3 = €0,013.
3. The amount of VAT is calculated by applying the VAT rate to the PV excluding VAT: €0,013 x 5,5% = €0,000715.
4. The VAT-inclusive price is obtained by adding the VAT to the VAT-exclusive price: €0,013 + €0,000715 = €0,013715 rounded to €0,014 because we cannot have a price in cents.
5. For 100 baguettes, the VAT-inclusive PV amounts to 100 x €0,014 = €1,4.
TechNova Application
States :
You are the financial manager of the small technology import-export company, TechNova. You recently purchased a batch of 1000 touchscreen tablets from an Asian supplier. You paid €200 excluding VAT per unit for these tablets. You must now set a selling price for these tablets, taking into account the company's various expenses and taxes.
From this basis, you know that your cost structure is as follows:
– Purchase cost excluding tax: €200
– Shipping costs: €10 per tablet
– Storage cost: €5 per tablet
– Desired margin: 30% of the purchase price excluding tax
The VAT rate applicable to touch tablets is 20%.
Work to do :
1. Calculate the unit purchase price excluding VAT of the tablets.
2. Calculate the unit cost of the tablets.
3. Calculate the unit selling price excluding tax of the tablets.
4. Calculate the unit VAT amount for the tablets.
5. Calculate the unit sales price including tax of the tablets.
Proposed correction:
1. The unit purchase price excluding VAT of the tablets is €200. This is the price paid to the supplier, excluding transport and storage costs and the desired margin.
2. The unit cost of tablets is calculated by adding the purchase cost, transportation costs and storage costs.
Cost price = Purchase price excluding tax + transport costs + storage costs
so we have: €200 + €10 + €5 = €215.
3. To determine the unit selling price excluding tax of the tablets, we add the desired margin to the cost price.
Desired margin = 30% of the purchase price, i.e. a margin of €60.
So, the selling price excluding tax = Cost price + desired margin
That is €215 + €60 = €275.
4. The unit VAT amount is calculated by multiplying the sales price excluding VAT by the VAT rate. VAT amount = Sales price excluding VAT x VAT rate
With the figures: €275 x 20% = €55.
5. Finally, to obtain the unit sales price including VAT of the tablets, we add the VAT amount to the sales price excluding VAT.
Selling price including tax = Selling price excluding tax + VAT amount which gives €275 + €55 = €330.
Pierre's Delights Application
States :
Pierre runs "Les Délices de Pierre", a pastry shop specializing in the sale of artisanal macarons. He wants to offer a box of 12 macarons that costs €8 excluding VAT. Pierre wants to make a 40% margin on the excluding VAT purchase price. The applicable VAT rate is 20%.
Work to do :
1. What is the purchase price excluding tax (PA HT) of the box of macarons?
2. How to calculate the unit margin that Pierre wants to achieve?
3. What is the selling price excluding tax (PV excluding tax) offered by Pierre?
4. How to calculate the amount of VAT?
5. What is the sales price including all taxes (PV TTC) of the box of macarons?
Proposed correction:
1. The purchase price excluding tax (PA HT) of the box of macarons is €8.
2. The unit margin can be calculated using the formula:
Unit margin = PA HT x margin rate. Here, this comes to: Unit margin = €8 x 40% = €3,20.
3. The selling price excluding tax (PV excluding tax) can be calculated by adding the purchase price excluding tax to the unit margin. Here, we will have: PV excluding tax = PA excluding tax + Unit margin, therefore €8 + €3,20 = €11,20.
4. The amount of VAT can be calculated using the formula:
VAT amount = PV excluding VAT x VAT rate.
In this example, this gives: VAT amount = €11,20 x 20% = €2,24.
5. The sales price including all taxes (PV TTC) can be determined by adding the sales price excluding tax to the VAT amount.
In the end, this gives: PV including tax = PV excluding tax + VAT amount
With the figures, we have: €11,20 + €2,24 = €13,44.
So, Pierre should offer his box of macarons at a sales price including all taxes (SRP TTC) of €13,44.