commercial calculations bts mco | 9 Exercises

Application: Spicy House

States :

La Maison Épicée is a small company specializing in the sale of rare spices. It wants to improve its business management by studying the performance of certain products. Here is the information concerning the Red Pepper of Madagascar:

• Purchase price excluding VAT: €50.
• Selling price excluding VAT: €75.
• Quantity sold: 100 units.

Work to do :

1. Calculate the unit margin for Madagascar Red Pepper.
2. Determine the margin rate for this item.
3. Calculate the overall margin made by selling this product.
4. Calculate the markup rate of this item.
5. By analyzing these results, what can you conclude about the profitability of this product?

Proposed correction:

1. To calculate the unit margin, we use the formula: Unit margin = PV HT – PA HT.
   As a replacement, €75 – €50 = €25.
   The unit margin is €25.

2. To determine the margin rate, we use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
   Replacing, ((€75 – €50) ÷ €50) x 100 = 50%.
   The margin rate is 50%.

3. To calculate the overall margin, we use the formula: Overall margin = Unit margin x quantity sold.

Replacing, €25 x 100 = €2.
The overall margin is €2.

4. To calculate the markup rate, we use the formula: Markup rate = ((PV HT – PA HT) ÷ PV HT) x 100.
   Replacing, ((€75 – €50) ÷ €75) x 100 = 33,33%.
   The markup rate is 33,33%.

5. Let's analyze the profitability: with a margin rate of 50% and an overall margin of €2, the product is very profitable. The markup rate of 500% confirms that the company manages to sell at a price well above the purchase cost.

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
Brand taxes	((PV HT – PA HT) ÷ PV HT) x 100

Application: TechnoVision

States :

TechnoVision, an electronics store, has introduced a new LED display. Here are the details for this display:

• Purchase price excluding VAT: €200.
• Selling price excluding VAT: €290.
• Annual storage cost per unit: €5.
• Annual demand: 400 units.
• Order cost: €30 per order.

Work to do :

1. Calculate the unit margin for this LED display.
2. Determine the QEC (Economic Order Quantity) for this screen.
3. Calculate the margin rate of this screen.
4. If the demand was 600 units per year, what would be the new impact on the QEC?
5. Analyzing the results, what management advice would you give to TechnoVision?

Proposed correction:

1. To calculate the unit margin, we use the formula: Unit margin = PV HT – PA HT.
   As a replacement, €290 – €200 = €90.
   The unit margin is €90.

2. To determine the QEC, we use the formula: QEC = ?((2 x Annual Demand x Ordering Cost) ÷ Storage Cost).
   Substituting, ?((2 x 400 x 30) ÷ 5) = ?(48 ÷ 000) = ?5 = approximately 9 units.
   The QEC is approximately 98 units.

3. To determine the margin rate, we use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.

Replacing, ((€290 – €200) ÷ €200) x 100 = 45%.
The margin rate is 45%.

4. If demand increases to 600 units, the QEC calculation becomes:
   QEC = ?((2 x 600 x 30) ÷ 5) = ?(72 ÷ 000) = ?5 = approximately 14 units.
   The new QEC is approximately 120 units.

5. The results indicate that TechnoVision enjoys a good unit margin and a high markup rate. By adjusting order quantities according to the QEC, they can minimize inventory and ordering costs, thereby improving efficiency.

Formulas Used:

Title	Formulas
Unit margin	PV HT – PA HT
QEC	?((2 x Annual Demand x Ordering Cost) ÷ Storage Cost)
Margin rate	((PV HT – PA HT) ÷ PA HT) x 100

Application: Couture Chic

States :

Couture Chic, a clothing workshop, is launching a new summer dress. Here are the data for this model:

• Purchase price excluding VAT: €30.
• Selling price excluding VAT: €60.
• Quantity sold: 200 dresses.

Work to do :

1. Determine the unit margin for the summer dress.
2. Calculate the margin rate for this product.
3. Calculate the overall margin generated by the sale of this dress.
4. A 10% discount is granted on the sales price excluding VAT. What is the new markup rate after this discount?
5. What can we conclude about the impact of the discount on the profitability of the dress?

Proposed correction:

1. To determine the unit margin, we use the formula: Unit margin = PV HT – PA HT.
   As a replacement, €60 – €30 = €30.
   The unit margin is €30.

2. To calculate the margin rate, we use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
   Replacing, ((€60 – €30) ÷ €30) x 100 = 100%.
   The margin rate is 100%.

3. To determine the overall margin, we use the formula: Overall margin = Unit margin x quantity sold.

Replacing, €30 x 200 = €6.
The overall margin is €6.

4. For the new mark rate with a 10% discount, the new PV excluding tax becomes €60 – (€60 x 0,10) = €54.
   Markup rate = ((€54 – €30) ÷ €54) x 100 = 44,44%.
   The new mark rate is 44,44%.

5. The impact of the discount reduces the markup rate, which lowers the unit profitability of each dress. However, if the discount increases sales enough, it could offset the loss in unit margin.

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
Brand taxes	((PV HT – PA HT) ÷ PV HT) x 100

Application: Sweet Treats

States :

Gourmandises Sucrées, a pastry company, wants to evaluate the profitability of its macarons. Here is the information:

• Purchase price excluding VAT of ingredients per macaron: €1,20.
• Selling price excluding tax of a macaroon: €2,50.
• Monthly quantities sold: 1 macaroons.

Work to do :

1. Calculate the unit margin for a macaron.
2. Determine the margin rate of the macarons.
3. Calculate the overall margin for monthly sales.
4. If the purchase price increases by 10%, what will the new margin rate be?
5. Analyze the implications of increased costs on pricing decisions.

Proposed correction:

1. To calculate the unit margin, we use the formula: Unit margin = PV HT – PA HT.
   As a replacement, €2,50 – €1,20 = €1,30.
   The unit margin is €1,30.

2. To determine the margin rate, we use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
   Replacing, ((€2,50 – €1,20) ÷ €1,20) x 100 = 108,33%.
   The margin rate is 108,33%.

3. To calculate the overall margin, we use the formula: Overall margin = Unit margin x quantities sold.

By replacing, €1,30 x €1 = €000.
The overall monthly margin is €1.

4. If the purchase price increases by 10%, the new purchase price becomes €1,20 x 1,10 = €1,32.
   New margin rate = ((€2,50 – €1,32) ÷ €1,32) x 100 = 89,39%.
   The new margin rate is 89,39%.

5. An increase in costs reduces the margin rate. Gourmandises Sucrées may consider adjusting the selling price or exploring alternatives to reduce costs in order to maintain their margins.

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 quantities sold

Application: EcoMobiles

States :

EcoMobiles, an electric bike retailer, offers a popular model to customers. The data for this model is:

• Purchase price excluding VAT: €1.
• Selling price excluding VAT: €1.
• Quantity sold: 150 units.

Work to do :

1. Calculate the unit margin for the electric bike.
2. Determine the margin rate for this product.
3. Calculate the overall margin generated by the sale of this model.
4. If EcoMobiles wants to offer a 15% discount on the retail price excluding VAT, what would be the new markup rate?
5. What strategy would you recommend to maintain profitability despite the discount offered?

Proposed correction:

1. To calculate the unit margin, we use the formula: Unit margin = PV HT – PA HT.
   Substituting, €1 – €800 = €1.
   The unit margin is €600.

2. To determine the margin rate, we use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
   Substituting, ((€1 – €800) ÷ €1) x 200 = 1%.
   The margin rate is 50%.

3. To calculate the overall margin, we use the formula: Overall margin = Unit margin x quantity sold.

Replacing, €600 x 150 = €90.
The overall margin is €90.

4. For the new markup rate with a 15% reduction, the new PV excluding tax becomes €1 – (€800 x 1) = €800.
   Markup rate = ((€1 – €530) ÷ €1) x 200 = 1%.
   The new mark rate is 21,57%.

5. To maintain profitability after a downsizing, EcoMobiles could increase sales volumes, diversify complementary products or negotiate cost agreements with suppliers.

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
Brand taxes	((PV HT – PA HT) ÷ PV HT) x 100

Application: Knowledge Library

States :

Librairie Savoir, specializing in educational books, has launched a new encyclopedia. Here is the associated data:

• Purchase price excluding VAT: €25.
• Selling price excluding VAT: €50.
• Quantity sold: 500 copies.

Work to do :

1. Calculate the unit margin for the encyclopedia.
2. Determine the margin rate for this product.
3. Calculate the overall margin made from the sale of this book.
4. Consider a seasonal discount of 10% on the selling price excluding VAT. What is the new margin rate?
5. How can seasonal discounting affect sales strategy and long-term profitability?

Proposed correction:

1. To calculate the unit margin, we use the formula: Unit margin = PV HT – PA HT.
   As a replacement, €50 – €25 = €25.
   The unit margin is €25.

2. To determine the margin rate, we use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
   Replacing, ((€50 – €25) ÷ €25) x 100 = 100%.
   The margin rate is 100%.

3. To calculate the overall margin, we use the formula: Overall margin = Unit margin x quantity sold.

Replacing, €25 x 500 = €12.
The overall margin is €12.

4. For the new margin rate with a 10% reduction, the new PV excluding tax becomes €50 – (€50 x 0,10) = €45.
   Margin rate = ((€45 – €25) ÷ €25) x 100 = 80%.
   The new margin rate is 80%.

5. A seasonal discount potentially increases sales when demand is low, but it can also train customers to expect discounts. It is important to balance the immediate impact on margins with customer retention goals.

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

Application: Coffee Flavors

States :

Saveurs Café, a renowned establishment for its exclusive coffees, offers a variety of coffee beans. Here is the information about one of them:

• Purchase price excluding tax: €10 per kg.
• Selling price excluding tax: €25 per kg.
• Quantity sold monthly: 300 kg.

Work to do :

1. Determine the unit margin for one kg of coffee.
2. Calculate the margin rate for this product.
3. Calculate the overall margin for monthly sales.
4. If the purchase price decreases by 20%, what would be the new margin rate?
5. What positive impact could this price reduction have on Saveurs Café’s operations?

Proposed correction:

1. To determine the unit margin, we use the formula: Unit margin = PV HT – PA HT.
   As a replacement, €25 – €10 = €15.
   The unit margin is €15.

2. To calculate the margin rate, we use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
   Replacing, ((€25 – €10) ÷ €10) x 100 = 150%.
   The margin rate is 150%.

3. To calculate the overall margin, we use the formula: Overall margin = Unit margin x quantities sold.

Replacing, €15 x 300 = €4.
The overall monthly margin is €4.

4. If the purchase price decreases by 20%, the new purchase price becomes €10 x 0,80 = €8.
   New margin rate = ((€25 – €8) ÷ €8) x 100 = 212,5%.
   The new margin rate is 212,5%.

5. The lower purchase price allows Saveurs Café to increase its margins, providing the opportunity to invest in other aspects of the business, such as improving customer service or developing new products.

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 quantities sold

Application: GreenTech Solutions

States :

GreenTech Solutions, a renewable energy solutions provider, offers a high-quality solar panel. Here are the data:

• Purchase price excluding VAT: €300.
• Selling price excluding VAT: €500.
• Quantity sold: 200 panels.

Work to do :

1. Calculate the unit margin for a solar panel.
2. Evaluate the margin rate for this product.
3. Calculate the overall margin made from the sale of the panels.
4. If GreenTech Solutions offers a 12% discount on the net selling price, what would be the new markup rate?
5. How could GreenTech Solutions compensate for the loss of margin due to this reduction?

Proposed correction:

1. To calculate the unit margin, we use the formula: Unit margin = PV HT – PA HT.
   As a replacement, €500 – €300 = €200.
   The unit margin is €200.

2. To evaluate the margin rate, we use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
   Replacing, ((€500 – €300) ÷ €300) x 100 = 66,67%.
   The margin rate is 66,67%.

3. To calculate the overall margin, we use the formula: Overall margin = Unit margin x quantity sold.

Replacing, €200 x 200 = €40.
The overall margin is €40.

4. For the new markup rate with a 12% reduction, the new PV excluding tax becomes €500 – (€500 x 0,12) = €440.
   Markup rate = ((€440 – €300) ÷ €440) x 100 = 31,82%.
   The new mark rate is 31,82%.

5. To compensate for the loss of margin, GreenTech Solutions could expand its customer base, increase promotional efforts to increase volumes sold or negotiate better terms with its suppliers.

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
Brand taxes	((PV HT – PA HT) ÷ PV HT) x 100

Application: Local Wines

States :

Les Vins du Terroir, specializing in local wines, is launching a new vintage of organic red wine. Here are the details:

• Purchase price excluding tax: €8 per bottle.
• Selling price excluding VAT: €20 per bottle.
• Quantity sold: 800 bottles.

Work to do :

1. Calculate the unit margin for a bottle of organic wine.
2. Determine the margin rate for this wine.
3. Calculate the overall margin made by the sale of this vintage.
4. If Les Vins du Terroir applies a 5% reduction on the selling price excluding tax during a festival, what would be the new markup rate?
5. What impact could this reduction have on the brand's image and perception?

Proposed correction:

1. To calculate the unit margin, we use the formula: Unit margin = PV HT – PA HT.
   As a replacement, €20 – €8 = €12.
   The unit margin is €12.

2. To determine the margin rate, we use the formula: Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
   Replacing, ((€20 – €8) ÷ €8) x 100 = 150%.
   The margin rate is 150%.

3. To calculate the overall margin, we use the formula: Overall margin = Unit margin x quantity sold.

Replacing, €12 x 800 = €9.
The overall margin is €9.

4. For the new markup rate with a 5% reduction, the new PV excluding tax becomes €20 – (€20 x 0,05) = €19.
   Markup rate = ((€19 – €8) ÷ €19) x 100 = 57,89%.
   The new mark rate is 57,89%.

5. Offering a discount can generate an influx of new customers and boost sales, but it is crucial to ensure that it does not devalue the premium image of organic wine.

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
Brand taxes	((PV HT – PA HT) ÷ PV HT) x 100