Summary
Application: L’Atelier Gourmand
States :
L'Atelier Gourmand is a company specializing in the sale of high-end cakes and pastries. Having noticed a drop in margins during the last quarter, the director wishes to analyze certain parameters to identify the reasons for this decrease. The following information is available:
- The sales price excluding tax (PV HT) of a cake is €32.
- The purchase price excluding tax (PA HT) for this cake is €20.
- Every month, 500 cakes are sold.
- Annual order cost: €1.
- Annual storage cost: €12.
- Annual demand: 6 cakes.
Work to do :
- Calculate the margin rate for each cake.
- Determine the overall monthly margin made on cakes.
- What is the monthly working capital requirement (WCR), knowing that current assets are €10 and current resources are €000?
- Identify the selling price that would need to be charged to achieve a 40% markup rate.
- Calculate the Economic Order Quantity (EOQ) to optimize inventory management.
Proposed correction:
-
The margin rate is calculated using the formula:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Applying the values: ((32 – 20) ÷ 20) x 100 = 60%.
The margin rate for each cake is 60%. -
The unit margin is PV HT – PA HT = 32 – 20 = 12 €.
The overall monthly margin is Unit margin x quantity sold = €12 x 500 = €6.
The overall margin made on the cakes each month is €6.
The WCR is defined by the formula: WCR = Current jobs – Current resources.
So, BFR = €10 – €000 = €7.
The working capital requirement is €3.
-
For a markup rate of 40%, use the formula: PV HT = PA HT ÷ (1 – Markup rate).
Therefore, PV HT = 20 ÷ (1 – 0,40) = €33,33.
The selling price for a 40% markup would be €33,33. -
Apply the QEC formula: QEC = ?((2 x Annual Demand x Ordering Cost) ÷ Storage Cost).
This gives QEC = ?((2 x 6 x 000) ÷ 1) = ?(200 ÷ 12) = ?(000) = 14.
The optimal economic order quantity is approximately 35 cakes.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| BFR | Circulating Jobs – Circulating Resources |
| Selling Price (Markup Rate) | PA HT ÷ (1 – Mark rate) |
| QEC | ?((2 x Annual Demand x Ordering Cost) ÷ Storage Cost) |
Application: Tech Innovators
States :
Tech Innovators is a startup that offers innovative technological gadgets. To reconcile technological development and optimal cost management, the company analyzes its sales and logistics costs. Here is the available data:
- Retail price excluding tax per gadget: €120
- Purchase price excluding tax per gadget: €80
- Monthly sales volume: 800 units
- Annual order cost: €800
- Annual storage cost: €10
- Annual demand: 9 gadgets
Work to do :
- Calculate the margin rate for a gadget.
- Determine the total monthly margin on gadget sales.
- What is the monthly working capital requirement (WCR) if current assets are €15 and current resources are €000?
- What selling price is required for a 30% markup?
- Calculate the recommended Economic Order Quantity (EOQ).
Proposed correction:
-
The margin rate is calculated as follows:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Replacing: ((120 – 80) ÷ 80) x 100 = 50%.
So the margin rate per gadget is 50%. -
The unit margin is calculated as PV HT – PA HT, i.e. 120 – 80 = €40.
The overall monthly margin is Unit margin x quantity sold = €40 x 800 = €32.
The total monthly margin is therefore €32.
BFR is determined by the formula BFR = Current jobs – Current resources.
So, BFR = €15 – €000 = €9.
The working capital requirement is €6 per month.
-
To obtain a markup rate of 30%, calculate PV HT by:
PV HT = PA HT ÷ (1 – Mark rate).
This gives PV HT = 80 ÷ (1 – 0,30) = €114,29.
The necessary sale price is €114,29 for a markup rate of 30%. -
The QEC is calculated by:
QEC = ?((2 x Annual demand x Ordering cost) ÷ Storage cost).
So, QEC = ?((2 x 9 x 600) ÷ 800) = ?(10 ÷ 000) = ?(15) = 360.
The optimal QEC is about 39 gadgets.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| BFR | Circulating Jobs – Circulating Resources |
| Selling Price (Markup Rate) | PA HT ÷ (1 – Mark rate) |
| QEC | ?((2 x Annual Demand x Ordering Cost) ÷ Storage Cost) |
Application: Beautiful Trend
States :
Belle Tendance company specializes in chic and elegant women's clothing. In an effort to improve profitability, they need to re-evaluate their margins and costs. The following data is provided:
- Selling price excluding tax for a dress: €75
- Purchase price excluding tax of a dress: €45
- Monthly sales: 1 dresses
- Annual order cost: €1
- Annual storage cost: €14
- Annual demand: 14 dresses
Work to do :
- Calculate the margin rate per dress.
- What is the overall monthly margin on dresses?
- Determine the overall net working capital (WWC) if the stable resources are €100 and the stable jobs are €000.
- Indicate the price excluding VAT required for a markup rate of 35%.
- Calculate the optimal Economic Order Quantity (EOQ).
Proposed correction:
-
Use the formula for the margin rate:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Calculating: ((75 – 45) ÷ 45) x 100 = 66,67%.
The margin rate per dress is 66,67%. -
The unit margin is PV HT – PA HT, i.e. 75 – 45 = €30.
The overall monthly margin is Unit margin x quantity sold = €30 x €1 = €200.
The overall monthly margin on dress sales is €36.
The FRNG is given by the formula FRNG = Stable resources – Stable jobs.
This gives FRNG = €100 – €000 = €80.
The overall net working capital is therefore €20.
-
For a markup rate of 35%, use: PV HT = PA HT ÷ (1 – Markup rate).
This gives us PV HT = 45 ÷ (1 – 0,35) = €69,23.
To achieve a markup rate of 35%, the price must be €69,23. -
The QEC is determined as follows:
QEC = ?((2 x Annual demand x Ordering cost) ÷ Storage cost).
This gives QEC = ?((2 x 14 x 400) ÷ 1) = ?(500 ÷ 14) = ?(500) = 43.
The recommended QEC is around 55 dresses.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| FRNG | Stable Resources – Stable Jobs |
| Selling Price (Markup Rate) | PA HT ÷ (1 – Mark rate) |
| QEC | ?((2 x Annual Demand x Ordering Cost) ÷ Storage Cost) |
Application: EcoBio Health
States :
EcoBio Santé is a company that distributes organic products for health and well-being. With a desire to expand, they want to re-evaluate their pricing strategy and flow optimizations. You have the following information:
- Selling price excluding tax of a product: €50
- Purchase price excluding tax of a product: €30
- Monthly sales: 2 products
- Annual order cost: €1
- Annual storage cost: €9
- Annual demand: 30 products
Work to do :
- Calculate the margin rate on a product.
- What is the total monthly margin on these products?
- What is the working capital requirement (WCR) if current assets are €20 and current resources are €000?
- Establish the selling price that would be required for a 25% markup rate.
- Calculate the optimal Economic Order Quantity (EOQ).
Proposed correction:
-
The margin rate is determined by:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Replacement: ((50 – 30) ÷ 30) x 100 = 66,67%.
The margin rate on each product is 66,67%. -
Calculation of the unit margin: PV HT – PA HT = 50 – 30 = 20 €.
The total monthly margin is: Unit margin x quantity sold = €20 x €2 = €500.
The total monthly margin therefore reaches €50.
BFR measured by: BFR = Current jobs – Current resources.
So BFR = €20 – €000 = €12.
The working capital requirement amounts to €8.
-
Calculation for a markup rate of 25%: PV HT = PA HT ÷ (1 – Markup rate).
So PV HT = 30 ÷ (1 – 0,25) = 40 €.
The required selling price for a 25% markup rate is €40. -
The QEC is calculated with:
QEC = ?((2 x Annual demand x Ordering cost) ÷ Storage cost).
So QEC = ?((2 x 30 x 000) ÷ 1) = ?(300 ÷ 9) = ?(000) = 78.
The optimal Economic Order Quantity is approximately 93 products.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| BFR | Circulating Jobs – Circulating Resources |
| Selling Price (Markup Rate) | PA HT ÷ (1 – Mark rate) |
| QEC | ?((2 x Annual Demand x Ordering Cost) ÷ Storage Cost) |
Application: Light and Co.
States :
Lumière et Co. is a recent company that creates and sells designer lighting. The management wants to analyze current performance to adjust the business strategy. Here are some data:
- Selling price excluding tax of a light fixture: €150
- Purchase price excluding tax of a light fixture: €100
- Monthly sales: 300 lights
- Annual order cost: €2
- Annual storage cost: €15
- Annual demand: 3 luminaires
Work to do :
- Calculate the margin rate for each fixture.
- Determine the overall monthly margin achieved.
- What is the working capital requirement (WCR) if current assets are €25 and current resources are €000?
- Enter the selling price needed to achieve a 20% markup rate.
- Calculate the optimal Economic Order Quantity (EOQ).
Proposed correction:
-
The margin rate is given by:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Calculation: ((150 – 100) ÷ 100) x 100 = 50%.
The margin rate for each luminaire is 50%. -
Unit margin is calculated by: PV HT – PA HT = 150 – 100 = 50 €.
The overall monthly margin is: Unit margin x quantity sold = €50 x 300 = €15.
The total monthly margin therefore amounts to €15.
BFR is given by: BFR = Current jobs – Current resources.
This gives BFR = €25 – €000 = €18.
The working capital requirement is then €7.
-
For a markup rate of 20%, calculate PV HT according to: PV HT = PA HT ÷ (1 – Markup rate).
This gives us PV HT = 100 ÷ (1 – 0,20) = €125.
The required sale price is therefore €125 for a markup rate of 20%. -
Economic Order Quantity is determined by:
QEC = ?((2 x Annual demand x Ordering cost) ÷ Storage cost).
This leads to: QEC = ?((2 x 3 x 600) ÷ 2) = ?(000 ÷ 15) = ?(000) = 14.
The optimal QEC indicates approximately 31 luminaires.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| BFR | Circulating Jobs – Circulating Resources |
| Selling Price (Markup Rate) | PA HT ÷ (1 – Mark rate) |
| QEC | ?((2 x Annual Demand x Ordering Cost) ÷ Storage Cost) |
Application: Altitude Sports
States :
Altitude Sports is a company distributing equipment for mountain sports. In order to evaluate their profitability and storage, they analyze current data. The available information is:
- Selling price excluding tax of equipment: €200
- Purchase price excluding tax of equipment: €120
- Monthly sales: 500 equipments
- Annual order cost: €3
- Annual storage cost: €20
- Annual demand: 6 devices
Work to do :
- Determine the margin rate on each piece of equipment.
- What is the total amount of the monthly margin?
- Calculate the working capital requirement (WCR) knowing that current assets are €40 and current resources are €000.
- Estimate the selling price needed to achieve a 15% markup rate.
- What is the recommended Economic Order Quantity (EOQ)?
Proposed correction:
-
The margin rate is calculated by:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Calculating: ((200 – 120) ÷ 120) x 100 = 66,67%.
The margin rate per equipment is 66,67%. -
The unit margin is determined by: PV HT – PA HT = 200 – 120 = 80 €.
The total monthly margin will be: Unit margin x quantity sold = €80 x 500 = €40.
The total margin each month is therefore €40.
The WCR is calculated with: WCR = Current jobs – Current resources.
This gives BFR = €40 – €000 = €27.
The working capital requirement then reaches €13.
-
A markup rate of 15% requires: PV HT = PA HT ÷ (1 – Markup rate).
This means PV HT = 120 ÷ (1 – 0,15) = €141,18.
Thus, the required price excluding tax is €141,18 for a markup rate of 15%. -
The QEC is obtained by:
QEC = ?((2 x Annual demand x Ordering cost) ÷ Storage cost).
In application: QEC = ?((2 x 6 x 000) ÷ 3) = ?(000 ÷ 20) = ?(000) = 36.
The optimal economic order quantity is approximately 42 sets.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| BFR | Circulating Jobs – Circulating Resources |
| Selling Price (Markup Rate) | PA HT ÷ (1 – Mark rate) |
| QEC | ?((2 x Annual Demand x Ordering Cost) ÷ Storage Cost) |
Application: Green Gardening
States :
Verde Jardinage is a gardening tool supplier specializing in ecological products. To maximize its profits, the company wants to analyze its current performance. The data available are:
- Selling price excluding tax of a tool: €40
- Purchase price excluding tax of a tool: €25
- Monthly sales: 1 tools
- Annual order cost: €800
- Annual storage cost: €5
- Annual demand: 12 tools
Work to do :
- Calculate the margin rate on each tool.
- Determine the cumulative monthly margin on these sales.
- Evaluate the working capital requirement (WCR) with current assets of €18 and current resources of €000.
- To obtain a markup rate of 22%, what should the selling price excluding tax be?
- Calculate the ideal Economic Order Quantity (EOQ).
Proposed correction:
-
Use the formula:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Calculating: ((40 – 25) ÷ 25) x 100 = 60%.
Each tool has a margin rate of 60%. -
The unit margin is: PV HT – PA HT = 40 – 25 = €15.
The cumulative monthly margin is then: Unit margin x quantity sold = €15 x 1 = €000.
Thus, the cumulative margin each month is €15.
BFR is determined by: BFR = Current jobs – Current resources.
This gives BFR = €18 – €000 = €10.
The working capital requirement is therefore €8.
-
A markup rate of 22% requires: PV HT = PA HT ÷ (1 – Markup rate).
In calculation: PV HT = 25 ÷ (1 – 0,22) = €32,05.
For a markup rate of 22%, the price excluding VAT should be €32,05. -
QEC is calculated by:
QEC = ?((2 x Annual demand x Ordering cost) ÷ Storage cost).
This gives: QEC = ?((2 x 12 x 000) ÷ 800) = ?(5 ÷ 000) = ?(19) = 200.
The ideal QEC is approximately 62 tools.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| BFR | Circulating Jobs – Circulating Resources |
| Selling Price (Markup Rate) | PA HT ÷ (1 – Mark rate) |
| QEC | ?((2 x Annual Demand x Ordering Cost) ÷ Storage Cost) |
Application: ByteWare Solutions
States :
ByteWare Solutions specializes in selling management and development software for businesses. With rapid growth, they want to optimize their financial processes. Information includes:
- Selling price excluding tax of software: €250
- Software purchase price excluding VAT: €150
- Monthly sales: 400 software
- Annual order cost: €1
- Annual storage cost: €7
- Annual demand: 4 software programs
Work to do :
- Calculate the margin rate for each software.
- What is the monthly overall margin?
- Determine the working capital requirement (WCR) with current assets of €30 and current resources of €000.
- For a markup rate of 18%, what should the selling price excluding tax be?
- Calculate the optimal Economic Order Quantity (EOQ).
Proposed correction:
-
The margin rate is calculated by:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
In application: ((250 – 150) ÷ 150) x 100 = 66,67%.
Each software has a margin rate of 66,67%. -
Unit margin: PV HT – PA HT = 250 – 150 = 100 €.
The overall monthly margin is therefore: Unit margin x quantity sold = €100 x 400 = €40.
So the total monthly margin is €40.
The WCR is deduced by: WCR = Current jobs – Current resources.
So BFR = €30 – €000 = €22.
Therefore, the working capital requirement amounts to €8.
-
With a markup rate of 18%, calculate PV HT as follows: PV HT = PA HT ÷ (1 – Markup rate).
Which gives PV HT = 150 ÷ (1 – 0,18) = €182,93.
For a markup rate of 18%, the required selling price is €182,93. -
The optimal QEC is calculated with:
QEC = ?((2 x Annual demand x Ordering cost) ÷ Storage cost).
Let QEC = ?((2 x 4 x 800) ÷ 1) = ?(000 ÷ 7) = ?(500) = 9.
The ideal QEC is around 36 software.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| BFR | Circulating Jobs – Circulating Resources |
| Selling Price (Markup Rate) | PA HT ÷ (1 – Mark rate) |
| QEC | ?((2 x Annual Demand x Ordering Cost) ÷ Storage Cost) |
Application: GoFit Equipment
States :
GoFit Equipment is a company active in the fitness equipment sector. In full expansion, it wants to optimize its costs and margins to remain competitive. The data provided are:
- Selling price excluding tax of equipment: €500
- Purchase price excluding tax of equipment: €320
- Monthly sales: 150 equipments
- Annual order cost: €2
- Annual storage cost: €18
- Annual demand: 1 devices
Work to do :
- Calculate the margin rate for each piece of equipment.
- What is the overall monthly margin achieved?
- Identify the working capital requirement (WCR) with current uses of €45 and current resources of €000.
- For a markup rate of 25%, what should the selling price excluding tax be?
- Calculate the ideal Economic Order Quantity (EOQ).
Proposed correction:
-
The margin rate is obtained by:
Margin rate = ((PV excluding tax – PA excluding tax) ÷ PA excluding tax) x 100
Result: ((500 – 320) ÷ 320) x 100 = 56,25%.
The margin rate for each piece of equipment is 56,25%. -
Unit margin: PV HT – PA HT = 500 – 320 = 180 €.
The overall monthly margin achieved is: Unit margin x quantity sold = €180 x 150 = €27.
The total margin each month is therefore €27.
Determine BFR with: BFR = Current jobs – Current resources.
So BFR = €45 – €000 = €35.
The working capital requirement amounts to €10.
-
For a markup rate of 25%, use: PV HT = PA HT ÷ (1 – Markup rate).
So PV HT = 320 ÷ (1 – 0,25) = €426,67.
The selling price excluding tax must be €426,67 for a markup rate of 25%. -
Optimal Economic Order Quantity by:
QEC = ?((2 x Annual demand x Ordering cost) ÷ Storage cost).
Which gives QEC = ?((2 x 1 x 800) ÷ 2) = ?(500 ÷ 18) = ?(000) = 9.
The ideal QEC is around 22 devices.
Formulas Used:
| Title | Formulas |
|---|---|
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| Overall margin | Unit margin x quantity sold |
| BFR | Circulating Jobs – Circulating Resources |
| Selling Price (Markup Rate) | PA HT ÷ (1 – Mark rate) |
| QEC | ?((2 x Annual Demand x Ordering Cost) ÷ Storage Cost) |