In this section:
Application: Fashion Flashes
States :
Éclats de Mode is a boutique specializing in gemstone accessories. Recently, the boutique purchased a batch of necklaces worth a total of €4 excluding tax (HT). Each necklace is sold at a price of €500 excluding tax. The manager wants to analyze the performance of the boutique by calculating various margins in order to best adjust its commercial strategy.
Work to do :
- Calculate the unit margin on a necklace sold.
- Calculate the store's margin rate.
- What is the overall margin if 50 necklaces are sold?
- If the VAT rate is 20%, what is the selling price including VAT of a necklace?
- Analyze the impact of a 10% reduction on the net selling price of a necklace.
Proposed correction:
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Calculation of the unit margin on a necklace sold:
To calculate the unit margin, subtract the unit purchase price from the unit selling price.
The unit purchase price is €4 ÷ 500 necklaces = €30.
The unit margin is therefore €150 (PV) – €150 (PA) = €0.Conclusion: The store has no unit margin on this necklace because it sells it at purchase cost.
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Calculating the store margin rate:
The margin rate formula is: ((PV HT – PA HT) ÷ PA HT) x 100.
Let's substitute: ((150 – 150) ÷ 150) x 100 = 0%.Conclusion: Since the margin rate is 0%, the store does not make a profit on this product.
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Calculation of the overall margin if 50 necklaces are sold:
The overall margin is the unit margin x the quantity sold.
As the unit margin is €0, the overall margin is: €0 x 50 = €0.
Conclusion: Selling 50 necklaces does not generate an overall profit.
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Calculation of the selling price including tax of a necklace:
The sales price including tax is calculated by adding VAT to the sales price excluding tax.
VAT included = VAT excluded + (VAT excluded x VAT rate) = 150 + (150 x 0,20) = 150 + 30 = €180.Conclusion: The selling price including tax of a necklace is €180.
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Analysis of the impact of a 10% reduction on the net selling price of a necklace:
The new PV excluding tax with reduction is €150 – (€150 x 0,10) = €135.
The new unit margin is €135 – €150 = -€15.
Margin rate = ((135 – 150) ÷ 150) x 100 = -10%.Conclusion: A 10% reduction would result in a loss of €15 per necklace, making the sale unfavorable.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit margin | PV HT – PA HT |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| Sales price including tax | PV HT + (PV HT x VAT rate) |
| New unit price after discount | PV HT – (PV HT x reduction) |
Application: Delicacies of Paris
States :
Gourmandises de Paris is an artisanal chocolate maker that buys its raw materials at high quality. They recently bought chocolate for €10 excluding tax to make 000 bars. Each bar is sold for €800 excluding tax. In order to ensure profitability, the manager wants to make several calculations.
Work to do :
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Determine the unit purchase cost of a tablet.
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Calculate the unit margin for each tablet.
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What is the overall margin if 500 tablets are sold?
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What is the markup rate for the tablets sold?
- Gourmandises de Paris is considering lowering their selling price to €22 excluding VAT to boost sales. What would be the new markup rate?
Proposed correction:
-
Determine the unit purchase cost of a tablet:
The unit purchase cost is calculated by dividing the total cost by the number of units.
So, €10 ÷ €000 = €800 per tablet.Conclusion: Each tablet has a purchase cost of €12,50.
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Calculation of the unit margin for each tablet:
The unit margin is the PV HT minus the PA HT.
So, €25 – €12,50 = €12,50.Conclusion: The margin made on each tablet is €12,50.
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Calculation of the overall margin if 500 tablets are sold:
Multiply the unit margin by the number of tablets sold.
€12,50 x 500 = €6.
Conclusion: The sale of 500 tablets generates an overall margin of €6.
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Calculation of the markup rate for tablets sold:
The markup rate is: ((PV HT – PA HT) ÷ PV HT) x 100.
So, ((25 – 12,50) ÷ 25) x 100 = 50%.Conclusion: The markup rate is 50%, which is excellent for ensuring good profitability.
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Impact of the drop in the selling price to €22 excluding VAT on the mark-up rate:
New markup rate = ((22 – 12,50) ÷ 22) x 100 = 43,18%.
Conclusion: Although the markup rate decreases to 43,18%, it remains high enough to maintain good profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit purchase cost | Total cost ÷ number of units |
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New mark rate | ((New PV – HT PA) ÷ New PV) x 100 |
Application: TechnoPlus
States :
TechnoPlus, an electronics distribution company, wants to evaluate its sales of tablets associated with a total purchase price of €18 for 000 units. Each tablet is currently sold at a price of €200 excluding VAT. Further examination of profitability is required.
Work to do :
- What is the purchase cost per tablet for TechnoPlus?
- Calculate the unit margin obtained for each tablet sold.
- Calculate the overall margin if TechnoPlus sells half of the tablets purchased.
- TechnoPlus wants to increase the selling price by 10%. What would be the new selling price excluding VAT?
- With this price increase, calculate the new margin rate.
Proposed correction:
-
Calculation of the purchase cost per tablet:
Purchase cost per unit = total cost ÷ number of units.
So, €18 ÷ €000 = €200 per tablet.Conclusion: The purchase cost per tablet is €90.
-
Calculation of the unit margin for each tablet sold:
Unit margin = PV HT – PA HT.
So, €150 – €90 = €60.Conclusion: Each tablet generates a unit margin of €60.
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Calculation of the overall margin if TechnoPlus sells half of the tablets:
Number of tablets sold = 200 ÷ 2 = 100.
Overall margin = unit margin x number of tablets sold.
So, €60 x 100 = €6.
Conclusion: The overall margin for 100 tablets sold is €6.
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Calculation of the new selling price excluding tax with a 10% increase:
New PV HT = PV HT + (PV HT x increase).
New PV excluding tax = €150 + (€150 x 0,10) = €165.Conclusion: The new selling price excluding VAT is €165.
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Calculation of the new margin rate with the price increase:
New margin rate = ((New PV HT – PA HT) ÷ PA HT) x 100.
So, ((165 – 90) ÷ 90) x 100 = 83,33%.Conclusion: The new margin rate would be 83,33%, which would improve profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit purchase cost | Total cost ÷ number of units |
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x quantity sold |
| New PV HT | PV HT + (PV HT x increase) |
| New margin rate | ((New PV HT – PA HT) ÷ PA HT) x 100 |
Application: Fleur Bleue Soap Factory
States :
Savonnerie Fleur Bleue, a manufacturer of artisanal soaps, has purchased materials for a total of €5 excluding VAT to produce 000 soaps. Each soap is sold at €1 excluding VAT. Management wants to check the balance between cost, margin and pricing strategy.
Work to do :
- Determine the unit purchase cost of each soap.
- Calculate the unit margin for each soap sold.
- Estimate the overall margin if 800 soaps are sold.
- What is the profitability in percentage (margin rate)?
- If the company decides to apply a 5% discount on the PV excluding VAT, what will the new selling price be?
Proposed correction:
-
Determine the unit purchase cost of each soap:
Unit cost = Total cost ÷ number of units.
So, €5 ÷ €000 = €1 per soap.Conclusion: The cost of purchasing a soap is €5.
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Calculation of the unit margin for each soap sold:
Unit margin = PV HT – PA HT.
So, €10 – €5 = €5.Conclusion: Each soap produces a margin of €5.
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Assessment of the overall margin if 800 soaps are sold:
Overall margin = unit margin x number of soaps sold.
So, €5 x 800 = €4.
Conclusion: The overall margin for the sale of 800 soaps is €4.
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Calculation of profitability in percentage (margin rate):
Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
So, ((10 – 5) ÷ 5) x 100 = 100%.Conclusion: The margin rate is 100%, which demonstrates strong profitability.
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Calculation of the new sales price after 5% discount on PV excluding VAT:
New PV HT = PV HT – (PV HT x discount).
New PV excluding tax = €10 – (€10 x 0,05) = €9,50.Conclusion: After the discount, the new selling price of a soap would be €9,50.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit cost | Total cost ÷ number of units |
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New PV HT | PV HT – (PV HT x discount) |
Application: CosmoPerfumes
States :
CosmoPerfumes distributes luxury perfume bottles. Supply costs amount to €7 excluding VAT for 200 bottles. The selling price per bottle is set at €120 excluding VAT. A review of financial performance is underway to face competition.
Work to do :
- What is the unit purchase value?
- Calculate the unit margin per bottle.
- What is the value of the overall margin if 70 bottles are sold?
- Calculate the markup rate for these bottles sold at €200 excluding VAT.
- Consider a 15% price increase strategy to assess the new margin rate.
Proposed correction:
-
Calculation of unit purchase value:
Unit cost = total cost ÷ number of units.
So, €7 ÷ 200 = €120.Conclusion: Each bottle has a purchase cost of €60.
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Calculation of unit margin per bottle:
Unit margin = PV HT – PA HT.
So, €200 – €60 = €140.Conclusion: The margin per bottle is €140.
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Value of the overall margin if 70 bottles are sold:
Overall margin = unit margin x number of bottles sold.
So, €140 x 70 = €9.
Conclusion: The overall margin achieved is €9 on the sale of 800 bottles.
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Calculation of the markup rate:
Mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
So, ((200 – 60) ÷ 200) x 100 = 70%.Conclusion: A 70% markup rate ensures excellent profitability.
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Evaluate the new margin rate after a 15% price increase:
New PV excluding VAT = PV excluding VAT + (PV excluding VAT x increase) = €200 + (€200 x 0,15) = €230.
New margin rate = ((230 – 60) ÷ 60) x 100 = 283,33%.Conclusion: Increasing the price by 15% would improve the margin rate to 283,33%, significantly boosting profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit cost | Total cost ÷ number of units |
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New PV HT | PV HT + (PV HT x increase) |
| New margin rate | ((New PV HT – PA HT) ÷ PA HT) x 100 |
Application: NaturelVet
States :
NaturelVet is a manufacturer of natural veterinary products. They recently invested €9 excluding VAT in herbs to make 000 bottles of supplements. Each bottle is sold for €600 excluding VAT. The director wants to evaluate the commercial effectiveness of these products.
Work to do :
- Determines the unit purchase price of a bottle.
- Calculate the unit margin obtained per bottle sold.
- Calculate the overall margin if 250 bottles are sold.
- Estimate the margin rate currently achieved.
- NaturelVet is considering lowering their selling price to €30 excluding VAT to reach a wider target. What would the margin rate be as a result?
Proposed correction:
-
Determine the unit purchase price of a bottle:
Unit cost = Total cost ÷ number of units.
So, €9 ÷ €000 = €600 per bottle.Conclusion: The unit purchase price is €15.
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Calculation of unit margin per bottle sold:
Unit margin = PV HT – PA HT.
So, €35 – €15 = €20.Conclusion: The margin on each bottle sold is €20.
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Calculation of the overall margin if 250 bottles are sold:
Overall margin = unit margin x number of bottles sold.
So, €20 x 250 = €5.
Conclusion: A sale of 250 bottles generates an overall margin of €5.
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Margin rate estimate:
Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
So, ((35 – 15) ÷ 15) x 100 = 133,33%.Conclusion: The current margin rate is 133,33%, indicating good profitability.
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Estimate of the new margin rate with a reduced selling price of €30 excluding VAT:
New margin rate = ((30 – 15) ÷ 15) x 100 = 100%.
Conclusion: By reducing the selling price to €30, the margin rate would decrease to 100%, but would still remain profitable.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit cost | Total cost ÷ number of units |
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New margin rate | ((New PV HT – PA HT) ÷ PA HT) x 100 |
Application: Bicycle Escape
States :
Bicycle Évasion, a supplier of urban bicycles, has just purchased a series of cycles for a total of €30 excluding VAT. These 000 bicycles are offered at €100 excluding VAT each, without any recent competition. The company wants to get a precise overview of its profitability.
Work to do :
- Determine the unit purchase cost of a bicycle.
- Calculate the unit margin for each bike.
- Calculate the overall margin if 40 bikes are sold.
- Exploring the pricing strategy, what is the current markup rate?
- If Bicycle Évasion plans a flash sale at €400 excluding tax per bike, what will the new brand rate be?
Proposed correction:
-
Determine the unit purchase cost of a bicycle:
Unit cost = Total cost ÷ number of bikes.
So, €30 ÷ 000 = €100.Conclusion: The unit purchase cost is €300.
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Calculation of the unit margin for each bike:
Unit margin = PV HT – PA HT.
So, €450 – €300 = €150.Conclusion: The unit margin for each bike is €150.
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Calculation of the overall margin if 40 bikes are sold:
Overall margin = unit margin x number of bikes sold.
So, €150 x 40 = €6.
Conclusion: Selling 40 bikes brings in an overall margin of €6.
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Calculation of the current markup rate:
Mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
So, ((450 – 300) ÷ 450) x 100 = 33,33%.Conclusion: The current markup rate is 33,33%, guaranteeing honest profitability.
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Impact of a flash sale at €400 excluding VAT on the markup rate:
New markup rate = ((400 – 300) ÷ 400) x 100 = 25%.
Conclusion: The €400 flash sale would reduce the markup rate to 25%, but could boost sales.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit cost | Total cost ÷ number of units |
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New mark rate | ((New PV HT – PA HT) ÷ New PV HT) x 100 |
Application: Ver elegance
States :
Ver Elegance, a sunglasses distributor, purchased 500 pairs of glasses for a total of €20 excluding VAT. Their market price is €000 excluding VAT per pair. Current sales must be optimized to align revenues and thermal strategy.
Work to do :
- How much does it cost to purchase a pair of glasses?
- Calculate the unit margin for a pair of glasses.
- Calculate the overall margin if 300 pairs are sold.
- Calculate the current margin rate for sunglasses.
- Analyze the impact of a price increase to €65 excluding VAT on the margin rate.
Proposed correction:
-
Calculation of the purchase cost per pair of glasses:
Unit cost = Total cost ÷ number of pairs.
So, €20 ÷ 000 = €500.Conclusion: The unit purchase cost is €40 per pair of glasses.
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Calculation of the unit margin for a pair of glasses:
Unit margin = PV HT – PA HT.
So, €60 – €40 = €20.Conclusion: Each pair of glasses generates a unit margin of €20.
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Calculation of the overall margin if 300 pairs are sold:
Overall margin = unit margin x number of pairs sold.
So, €20 x 300 = €6.
Conclusion: Selling 300 pairs leads to an overall margin of €6.
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Calculation of the current margin rate:
Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
So, ((60 – 40) ÷ 40) x 100 = 50%.Conclusion: The current margin rate of 50% shows positive profit feasibility.
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Impact of a price increase to €65 excluding VAT on the margin rate:
New margin rate = ((65 – 40) ÷ 40) x 100 = 62,50%.
Conclusion: An increase to €65 excluding VAT would increase the margin rate to 62,50%, which would strengthen profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit cost | Total cost ÷ number of units |
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New margin rate | ((New PV HT – PA HT) ÷ PA HT) x 100 |
Application: Sustainable Stationery
States :
Papeterie Durable sells eco-friendly notebooks made from recycled materials. The company purchased 1 notebooks for a total of €000 excluding VAT. The final sale price per notebook is set at €4 excluding VAT. A look at margins is necessary to adjust volumes in the face of growing demand.
Work to do :
- Calculate the unit purchase cost of a notebook.
- Determine the unit margin of each notebook sold.
- Estimate the overall margin if 600 notebooks are sold.
- What is the markup rate of the notebooks sold?
- If a promotion is launched with a sale price reduced to €7 excluding VAT, what will the new markup rate be?
Proposed correction:
-
Calculation of the unit purchase cost of a notebook:
Unit cost = total cost ÷ number of notebooks.
So, €4 ÷ €000 = €1.Conclusion: The unit purchase cost of a notebook is €4.
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Determine the unit margin of each notebook sold:
Unit margin = PV HT – PA HT.
So, €8 – €4 = €4.Conclusion: Each notebook sold generates a unit margin of €4.
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Estimated overall margin if 600 notebooks are sold:
Overall margin = unit margin x number of notebooks sold.
So, €4 x 600 = €2.
Conclusion: The sale of 600 notebooks generates an overall margin of €2.
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Calculation of the markup rate:
Mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
So, ((8 – 4) ÷ 8) x 100 = 50%.Conclusion: The markup rate is 50%, indicating profitable valuation.
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New brand rate with a promotion at €7 excluding VAT:
New markup rate = ((7 – 4) ÷ 7) x 100 = 42,86%.
Conclusion: With a promotional price of €7, the markup rate drops to 42,86%, remaining positive to encourage purchase.
Formulas Used:
| Title | Formulas |
|---|---|
| Unit cost | Total cost ÷ number of units |
| Unit margin | PV HT – PA HT |
| Overall margin | Unit margin x quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New mark rate | ((New PV HT – PA HT) ÷ New PV HT) x 100 |