Welcome to this article on exercises on business calculations and more specifically on how to calculate the sale price. Here you will find questions and answers related to the subject. But also 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 selling price in business calculations without any worries.
In this section:
List of formulas used to know how to calculate the selling price:
| Formulas | Explanation |
|---|---|
| Total cost excluding VAT = PA excluding VAT + Shipping costs + Storage costs | Calculation of total cost excluding taxes |
| Selling price excluding VAT = Total cost excluding VAT * (1 + Markup rate) | Calculation of the sales price excluding tax from the total cost |
| Selling price including tax = Selling price excluding tax * (1 + VAT rate) | Calculation of the sales price including tax |
| Unit margin = Selling price excluding VAT – Total cost excluding VAT | Calculation of unit margin |
| Cost price = Purchase cost + Additions cost | Cost price calculation |
| VAT = Selling price excluding VAT * VAT rate | Calculation of value added tax |
| Sales turnover excluding tax = Selling price excluding tax * Quantity sold | Calculation of turnover excluding tax |
| Actual HT turnover = HT turnover * (Refused request rate/100) | Adjustment of the HT CA based on the rate of refused requests |
| Brand Rate = ((PV HT – PA HT) / PV HT) * 100 | Calculation of the mark rate |
| Overall margin = Unit margin * Qty sold | Calculation of the overall margin |
| Total sales amount = Quantity sold * Selling price excluding VAT | Calculating the total amount of sales |
Little Gourmets App
States :
The company Les Petits Gourmets specializes in the production and sale of organic food products. Their assortment includes several types of products, including canned vegetables and pasta. The team leader provided the following information regarding a 500g batch of organic pasta:
– Purchase Price excluding VAT (PA excluding VAT): €1,50
– Shipping costs: 20 cents per lot
– Storage cost per batch: 10 cents
– The company applies a 50% markup rate on this type of product.
– The VAT rate applied by the company is 5,5%.
The manager wants to calculate the selling price to ensure that the company makes sufficient profit.
Work to do :
1. How to calculate the total cost excluding tax of the product?
2. How to calculate the sales price excluding tax (PV HT)?
3. How to calculate the sales price including VAT using the VAT rate?
4. How to calculate the unit margin on this product using the markup rate?
5. What would happen if the company decided to increase its markup rate to 60%?
Proposed correction:
1. Total cost excluding VAT = Purchase price excluding VAT + Shipping costs + Storage costs = €1,50 + €0,20 + €0,10 = €1,80
2. Selling price excluding VAT = Total cost excluding VAT * (1 + Markup rate) = €1,80 * (1 + 50/100) = €1,80 * 1,5 = €2,70
3. Sales price including tax = Sales price excluding tax * (1 + VAT rate) = €2,70 * (1 + 5,5/100) = €2,70 * 1,055 = €2,84 (rounded to the nearest cent)
4. Unit margin = Selling price excluding tax – Total cost excluding tax = €2,70 – €1,80 = €0,90
5. If the company decided to increase its markup rate to 60%, the new selling price excluding VAT would be: Selling price excluding VAT = Total cost excluding VAT * (1 + Markup rate) = €1,80 * (1 + 60/100) = €1,80 * 1,60 = €2,88. This means that the unit margin would also be increased, which would represent a greater profit for the company.
Summary of Formulas Used:
– Total cost excluding tax = PA excluding tax + Shipping costs + Storage costs
– Selling price excluding VAT = Total cost excluding VAT * (1 + Markup rate)
– Sales price including tax = Sales price excluding tax * (1 + VAT rate)
– Unit margin = Selling price excluding VAT – Total cost excluding VAT
Tasty Foods App
States :
The company Les Mets Savoureux is a company that produces and distributes fish-based food products. It buys fresh fish from a supplier. The cost of purchasing fish is €15 per kilogram.
The company "Les Mets Savoureux" also adds spices to add flavor and prepares the fish before putting it on sale. The cost of these additions and preparations is estimated at €5 per kg of fish.
The Company has set a margin rate of 30%.
Work to do :
1. What is the unit cost price of the product?
2. What is the amount of unit margin that the company wishes to achieve?
3. What is the tax-free selling price of the product?
4. What would be the sales price including tax with a VAT rate of 20%?
5. What would be the sales price including tax with a VAT rate of 5,5%?
Proposed correction:
1. The unit cost price of the product is calculated by adding the cost of purchasing the product and the cost of additions and preparations. In our case, this gives: €15 + €5 = €20.
2. The amount of the unit margin desired by the company is calculated by multiplying the unit cost price by the desired margin rate. In our case, this gives: €20 x 30% = €6.
3. The product's sales price excluding tax is calculated by adding the cost price and the margin. In our case, this gives: €20 + €6 = €26.
4. The sales price including VAT with a VAT rate of 20% is calculated by adding the sales price excluding VAT and the VAT (which is calculated by multiplying the sales price excluding VAT by the VAT rate). In our case, this gives: €26 + (€26 x 20%) = €31,20.
5. The sales price including VAT with a VAT rate of 5,5% is calculated in the same way. In our case, this gives: €26 + (€26 x 5,5%) = €27,43.
Summary of Formulas Used:
– Cost price (Unit Cost) = Purchase cost + Cost of additions and preparations
– Unit margin = Cost price x Margin rate
– Selling price excluding tax = Cost price + Unit margin
– Sales price including tax = Sales price excluding tax + (Sales price excluding tax x VAT rate)
Southern Delights Application
States :
The company Les Délices du Sud, which specializes in the production of artisanal jams, is looking to determine the selling price of its new apricot jam. The unit production cost of this jam is €2,50 (excluding taxes) and the company wants to achieve a margin of 60% on the production cost. In addition, the applicable VAT is 5,5%.
Work to do :
1. Determine the tax-free selling price of the jam.
2. Calculate the VAT amount.
3. So what would be the sales price including tax?
4. The company sells 5000 jars of jam per month, what will be the turnover excluding tax?
5. Sales take into account a 2% refusal rate, what would be the actual turnover excluding tax?
Proposed correction:
1. Selling price excluding VAT = (Purchase price excluding VAT + (Purchase price excluding VAT x Margin rate / 100)) = €2,50 + (€2,50 x 60 / 100) = €4,00
2. VAT = Sales price excluding VAT x VAT rate / 100 = €4,00 x €5,5 / 100 = €0,22
3. Sales price including VAT = Sales price excluding VAT + VAT = €4,00 + €0,22 = €4,22
4. Turnover excluding tax = Selling price excluding tax x Quantity sold = €4,00 x 5000 = €20
5. Refused request rate = (100% – Served request rate) = 100% – 2% = 98%;
Actual net turnover = Net turnover x (Refusal rate / 100) = €20 x 000,00 / 98 = €100.
Summary of Formulas Used:
– Selling price excluding VAT = (Purchase price excluding VAT + (Purchase price excluding VAT x Margin rate / 100))
– VAT = Selling price excluding VAT x VAT rate / 100
– Sales price including tax = Sales price excluding tax + VAT
– Turnover excluding tax = Selling price excluding tax x Quantity sold
– Actual net turnover = Net turnover x (Refused request rate/100)
FlareFashion App
States :
Fashion retailer FlareFashion plans to launch a new product, a limited edition t-shirt. The t-shirt costs the company €10 excluding VAT to produce. In addition, the company expects a 40% proportional margin on the production cost. Considering the applicable VAT rate of 20%, the company wants to set the selling price of the t-shirt.
Work to do :
1. Calculate the amount of margin the company expects to make on each t-shirt sold.
2. What will be the selling price excluding tax of the t-shirt?
3. How much VAT will be on the price of the t-shirt?
4. What will be the selling price including tax of the t-shirt?
5. What would be the new selling price excluding tax, if the company decides to increase its margin to 50%?
Proposed correction:
1. The margin that the company expects to make is calculated using the unit margin formula, which is the cost of production multiplied by the margin rate. So, Unit Margin = €10 x 40% = €4
2. The selling price excluding tax is the production cost added to the margin, which is €10 + €4 = €14
3. The amount of VAT is calculated by multiplying the sales price excluding VAT by the VAT rate. Which gives: VAT = €14 x 20% = €2,8
4. The sales price including VAT is calculated by adding the VAT amount to the sales price excluding VAT. Therefore, Price including VAT = €14 + €2,8 = €16,8
5. If the company decides to increase its margin to 50%, the new margin would be €10 x 50% = €5. Therefore, the new selling price excluding VAT would be €10 + €5 = €15.
Summary of Formulas Used:
– Unit margin = Production cost x Margin rate
– Selling price excluding tax = Production cost + Margin
– VAT = Selling price excluding VAT x VAT rate
– Price including tax = Sale price excluding tax + VAT
– New unit margin = Production cost x New margin rate
– New Selling Price excluding VAT = Production Cost + New Margin
Z Books App
States :
Mr. Z, owner of a book selling company called "Z Books", wants to increase his profits. He decides to revisit his selling price to achieve this. Here is the information about one of his books:
– Purchase price excluding tax (PA excluding tax): €15
– Desired margin rate: 30%
– Applicable VAT rate: 5,5%.
Work to do :
1. Calculate the amount of unit margin that Mr. Z wishes to achieve.
2. Calculate the Sales Price excluding tax (SVP HT).
3. Calculate the VAT amount.
4. Calculate the Sales Price All Taxes Included (PV including VAT).
5. Calculate the mark rate.
Proposed correction:
1. The unit margin is calculated as follows: Unit margin = PA HT * Margin rate. Here, we have Unit margin = €15 * 30/100 = €4,5
2. The Sales Price excluding Tax (SVP HT) is obtained by adding the PA HT and the margin. Therefore PV HT = PA HT + Unit margin. Here, PV HT = €15 + €4,5 = €19,5
3. The amount of VAT is calculated using the formula VAT = PV HT * VAT rate. In our case, we have VAT = €19,5 * 5,5/100 = €1,07 (rounded to two digits after the decimal point)
4. The All-Tax-Inclusive Sales Price (ATP) is obtained by adding the HT PV and the VAT. Therefore, ATP = HT PV + VAT. Here, ATP = €19,5 + €1,07 = €20,57
5. The markup rate is calculated using the formula Markup Rate = ((PV HT – PA HT) / PV HT) * 100). Here Markup Rate = ((€19,5 – €15) / €19,5) * 100 = 23,08%
Summary of Formulas Used:
– Unit margin = PA HT * Margin rate
– PV HT = PA HT + Unit margin
– VAT = PV HT * VAT rate
– PV incl. VAT = PV excl. VAT + VAT
– Mark Rate = ((PV HT – PA HT) / PV HT) * 100
Market Freshness Application
States :
Imagine that you work for the company La Fraicheur du Marché, a company specializing in the sale of fresh produce. You have received a list of new products with their purchase prices excluding tax (PA HT) and you have been asked to calculate their sale price excluding tax (PV HT) according to the following conditions:
1. Peaches: the purchase price before taxes is €2,00 per kg. The margin rate requested is 40%.
2. Melons: the purchase price before taxes is €1,50 each. The margin rate requested is 45%.
3. Cherries: the purchase price before taxes is €3,50 per kg. The desired margin rate is 35%.
In addition, the VAT rate applicable to the products is 20%.
Work to do :
1. What is the sales price excluding tax (PV HT) of peaches?
2. What is the sales price excluding tax (PV HT) of the melons?
3. What is the sales price excluding tax (PV HT) of the cherries?
4. What would be the after-tax sales price (ASP) for each product?
5. If the desired overall margin for all three products should be 40%, what would be the sales price excluding tax (SVP) to obtain this overall margin?
Proposed correction:
1. To calculate the net sales tax of the peaches, we will use the formula: Net sales tax = net sales tax/(1 – Margin rate). Therefore, Net sales tax = 2 ÷ (1 – 0,40) = €3,33.
2. To calculate the PV HT of melons, we use the same formula: PV HT = PA HT / (1 – Margin rate). Therefore, PV HT = 1,5 ÷ (1 – 0,45) = €2,73.
3. We use the same formula for cherries: PV HT = 3,5 ÷ (1 – 0,35) = €5,38.
4. To calculate the VAT PV for each product, we use the formula: VAT PV = VAT excluding VAT x (1 + VAT rate). For peaches, the VAT PV will be €3,33 x (1 + 0,20) = €4,00. For melons, the VAT PV will be €2,73 x (1 + 0,20) = €3,28. For cherries, the VAT PV will be €5,38 x (1 + 0,20) = €6,46.
5. To achieve an overall margin of 40%, the net selling price of each product must be recalculated so that the overall margin is achieved. The exact approach will depend on the company's pricing strategy, but one option could be to spread the price increases proportionally to the purchase cost of each product.
Summary of Formulas Used:
– PV HT = PA HT/(1 – Margin rate)
– PV including tax = PV excluding tax x (1 + VAT rate)
Chic Moda App
States :
A clothing store, Chic Moda, offers men's shirts that it buys from a supplier. The purchase cost excluding tax for each shirt is €20. The store applies a margin rate of 70% to calculate the sales price excluding tax (SRP excluding tax). The VAT applicable to this type of product is 20%.
Work to do :
1. Calculate the unit margin amount for each shirt.
2. Determine the sales price excluding tax (SRP HT) of each shirt.
3. Calculate the VAT amount for each shirt.
4. Calculate the sales price including all taxes (PV TTC) of each shirt.
5. If Chic Moda sells 100 shirts, what will its overall margin be?
Proposed correction:
1. The amount of the unit margin is calculated as follows: unit margin = PA HT x margin rate = €20 x 70/100 = €14. Therefore, the unit margin for each shirt is €14.
2. The sales price excluding tax (SVP HT) is calculated by adding the unit margin to the PA HT: SVP HT = PA HT + unit margin = €20 + €14 = €34. Therefore, the sales price excluding tax of each shirt is €34.
3. The VAT amount is calculated as follows: VAT per shirt = PV excluding VAT x VAT rate = €34 x 20/100 = €6,80. Therefore, the VAT for each shirt is €6,80.
4. The sales price including all taxes (PV TTC) is calculated by adding VAT to the PV excluding tax: PV TTC = PV excluding tax + VAT = €34 + €6,80 = €40,80. Therefore, the sales price including tax of each shirt is €40,80.
5. If Chic Moda sells 100 shirts, its overall margin will be: Overall margin = unit margin x quantity sold = €14 x 100 = €1. Therefore, its overall margin is €400.
Summary of Formulas Used:
– Unit margin: Unit margin = PA HT x margin rate
– Sales price excluding tax (PV HT): PV HT = PA HT + unit margin
– Amount of VAT: VAT = PV excluding VAT x VAT rate
– Sales price including tax: PV including tax = PV excluding tax + VAT
– Overall margin: Overall margin = Unit margin * quantity sold
Application HighTech Corp.
States :
The company HighTech Corp., which specializes in the sale of electronic products, recently imported the latest generation of smartphones at a price of €350 excluding tax (excluding taxes) per unit.
The company wants to apply a margin rate of 40% on the purchase cost excluding VAT to determine the selling price excluding VAT. The applicable VAT rate is 20%.
The company sold 1000 units of smartphones at the determined price. However, HighTech Corp. finds that the markup achieved is lower than it had anticipated. It therefore decides to revise its selling price, aiming for a markup of 28,5%.
Work to do :
1. Calculate the initial selling price excluding VAT using the desired margin rate.
2. Calculate the total amount of sales made through the sale of smartphones.
3. What is the markup rate achieved with this selling price excluding VAT?
4. What should the new selling price excluding VAT be to obtain the desired mark-up rate?
5. What will be the new total sales amount if the company sells the same number of smartphones at the new selling price excluding VAT?
Proposed correction:
1. The initial selling price excluding VAT is calculated as follows:
Selling price excluding tax = Purchase price excluding tax x (1 + Margin rate)
Hence: Selling price excluding tax = €350 x (1 + 40%) = €350 x 1,4 = €490.
2. The total amount of sales is:
Total sales amount = Quantity sold x Selling price excluding VAT
Hence Total sales amount = 1000 x €490 = €490.
3. The mark-up rate achieved with this excluding tax sale price is calculated as follows:
Markup rate = ((Selling price excluding VAT – Purchase price excluding VAT) / Selling price excluding VAT) x 100
Hence Markup rate = ((€490 – €350) / €490) x 100 = 28,57%.
4. The new selling price excluding tax to obtain the desired markup rate is calculated by:
Selling price excluding VAT = Purchase price excluding VAT / (1 – Markup rate)
Hence, Selling price excluding VAT = €350 / (1 – 28,5%) = €350 / 0,715 = €489,51.
5. The new total sales amount if the company sells the same number of smartphones at the new selling price excluding VAT is:
Total sales amount = Quantity sold x Selling price excluding VAT
Hence Total sales amount = 1000 x €489,51 = €489.
Summary of Formulas Used:
– Selling price excluding tax = Purchase price excluding tax x (1 + Margin rate)
– Total sales amount = Quantity sold x Selling price excluding tax
– Markup rate = ((Selling price excluding VAT – Purchase price excluding VAT) / Selling price excluding VAT) x 100
– Selling price excluding VAT = Purchase price excluding VAT / (1 – Markup rate)
Sweet Bakery Application
States :
Boulangerie Douceur is an establishment specializing in the sale of breads, pastries and other bakery products. For one of its new products, an artisanal brioche, the owner, Mr. Bernard, needs to determine the appropriate selling price to cover the purchasing and production costs, while generating a profit margin. The pre-tax purchase cost of each brioche is €0,80. The owner is aiming for a commercial margin of 75% on the pre-tax purchase cost.
Work to do :
1. Calculate the selling price excluding tax that Mr. Bernard should set for his artisanal brioche.
2. If Mr. Bernard decides to apply a VAT rate of 5,5%, what would be the selling price including tax of the brioche?
3. What would be the unit sales margin for each brioche sold?
4. If Mr. Bernard sells 500 buns per day, what would be his overall sales margin?
5. If Mr. Bernard decides to increase his selling price excluding tax by 10%, what would be the impact on the unit sales margin and the overall sales margin, assuming that he continues to sell 500 brioches per day?
Proposed correction:
1. The selling price (SPP) excluding VAT can be calculated using the formula:
PV HT = PA HT x (1 + Margin rate).
Here, PA HT = €0,80 and the Margin Rate = 75% = 0,75 in decimal. Therefore, PV HT = €0,80 x (1 + 0,75) = €1,40.
2. The sales price including VAT can be calculated using the formula:
PV including tax = PV excluding tax x (1 + VAT rate).
Here, PV HT = €1,40 and the VAT rate = 5,5% = 0,055 in decimal.
So, PV including tax = €1,40 x (1 + 0,055) = €1,48.
3. The unit margin can be calculated using the formula:
Unit margin = PV HT – PA HT.
Here, PV HT = €1,40 and PA HT = €0,80.
So, the unit margin = €1,40 – €0,80 = €0,60.
4. The overall margin can be calculated using the formula:
Overall margin = Unit margin x quantity sold.
The unit margin = €0,60 and the quantity sold = 500.
So, the overall margin = €0,60 x 500 = €300.
5. If Mr. Bernard increases the PV HT by 10%, the new PV HT = €1,40 x 1,1 = €1,54. The unit margin would now be €1,54 – €0,80 = €0,74.
So, with the sale of 500 buns per day, the overall margin would be €0,74 x 500 = €370.
Summary of Formulas Used:
– Selling price excluding tax: PV excluding tax = PA excluding tax x (1 + Margin rate)
– Selling price including tax: VAT inclusive = VAT excluding tax x (1 + VAT rate)
– Unit margin: Unit margin = PV excluding tax – PA excluding tax
– Overall margin: Overall margin = Unit margin x quantity sold
Raspberry Electronics app
States :
Raspberry Electronics company buys and sells computers.
– The purchase price excluding tax (PA HT) of a computer is €600.
– The company wishes to achieve a margin rate of 35% on the purchase price excluding tax.
– The company is subject to a VAT rate of 20%.
Work to do :
1. Calculate the unit margin amount.
2. Calculate the sales price excluding tax (PV HT).
3. Calculate the VAT amount.
4. Calculate the sales price including all taxes (PV TTC).
5. Analyze and comment on the result obtained.
Proposed correction:
1. To calculate the amount of the unit margin, we use the formula: Unit margin = Margin rate x PA HT
Unit margin = 35/100 x 600 = €210
2. To calculate the PV HT, we add the PA HT and the margin, i.e.: 600 + 210 = 810 €
3. To calculate the amount of VAT, we multiply the PV excluding VAT by the VAT rate: 810 x 20/100 = €162
4. To obtain the PV including tax, we add the PV excluding tax and the VAT: 810 + 162 = €972
5. According to the calculation, the selling price of the computer including VAT would be €972, including a margin of €210 and €162 VAT.
Summary of Formulas Used:
– Unit margin = Margin rate x PA HT
– PV HT = PA HT + Unit margin
– VAT amount = PV excluding VAT x VAT rate
– PV incl. tax = PV excl. tax + VAT amount
TechZone Application
States :
For its business of selling technology products, the company TechZone wants to calculate its sales prices. It therefore needs to understand how to determine them. The purchase price excluding tax (HT) of a product is €50,00. The margin rate envisaged by the company is 30%. The applicable Value Added Tax (VAT) rate is 20%.
Work to do :
1. What is the unit margin of each product?
2. What is the sales price excluding tax (HT) of the product?
3. How is the Value Added Tax (VAT) calculated on this product?
4. How much VAT is charged on this product?
5. So what is the sales price including all taxes (TTC) of the product?
Proposed correction:
1. The unit margin is calculated by applying the margin rate to the purchase price excluding VAT. Which gives: (€50,00 x 30) ÷ 100 = €15,00.
2. The selling price excluding VAT is calculated by adding the purchase price excluding VAT and the unit margin. Which gives: €50,00 + €15,00 = €65,00.
3. The amount of VAT is calculated by applying the VAT rate to the sales price excluding VAT.
4. Therefore, the VAT amount for this product is: (€65,00 x 20) ÷ 100 = €13,00.
5. The sales price including tax is calculated by adding the sales price excluding tax and the VAT amount. It is therefore: €65,00 + €13,00 = €78,00.
Summary of Formulas Used:
– Unit margin = (Purchase price excluding tax x Margin rate) ÷ 100
– Selling price excluding VAT = Purchase price excluding VAT + Unit margin
– VAT amount = (Sales price excluding VAT x VAT rate) ÷ 100
– Sales price including tax = Sales price excluding tax + VAT amount