Summary
Application: Gourmet Bakery
States :
Boulangerie Gourmande, located in Paris, wants to evaluate its sales performance of chocolate cakes. Manufacturing costs and sales prices must be analyzed to make strategic decisions. You have the following information: the cost of purchasing ingredients per cake is €8, the production cost per cake is €5, and the sales price excluding tax is €20. The bakery sold 500 cakes.
Work to do :
- Calculate the total cost of ingredients and production for all cakes sold.
- Determine the unit margin.
- Calculate the overall margin made by the bakery on these sales.
- Determine the margin rate.
- Analyze the impact of a 5% increase in the net selling price on the unit margin.
Proposed correction:
-
To calculate the total cost of ingredients and production for all cakes, use the following formula:
Total cost = (Purchase cost + Production cost) x Quantity sold.
Replacing, (€8 + €5) x 500 = €6.
The total cost is €6. -
To determine the unit margin, use the formula:
Unit margin = Selling price excluding tax – (Purchase cost + Production cost).
Replacing, €20 – (€8 + €5) = €7.
The unit margin is €7. -
To calculate the overall margin:
Overall margin = Unit margin x Quantity sold.
Replacing, €7 x 500 = €3.
The overall margin is €3.
-
The margin rate is calculated using the formula:
Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((€20 – (€8 + €5)) ÷ (€8 + €5)) x 100 = 53,85%.
The margin rate is 53,85%. -
To analyze the impact of a 5% increase in the net selling price, calculate the new selling price:
New PV HT = PV HT x (1 + 0,05).
Replacing, €20 x 1,05 = €21.
New unit margin = €21 – (€8 + €5) = €8.
The increase in the selling price results in a unit margin of €8, thus increasing the margin per cake.
Formulas Used:
| Title | Formulas |
|---|---|
| Total cost | (Purchase cost + Production cost) x Quantity sold |
| Unit margin | Selling price excluding VAT – (Purchase cost + Production cost) |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New PV HT | PV HT x (1 + Percentage increase) |
Application: TechNova Solutions
States :
TechNova Solutions, an innovative technology company, sells tablet computers. In order to assess its profitability, the company analyzes its costs and prices. Each tablet has a manufacturing cost of €120 and is sold at a price excluding VAT of €320. They have sold 1500 units. TechNova also wants to understand the effect of a 10% reduction in manufacturing costs on profitability.
Work to do :
- Calculate the total manufacturing cost for all units sold.
- Determine the unit margin for a tablet.
- Calculate the overall margin generated by sales.
- Calculate the markup rate.
- Calculate the new unit margin if the manufacturing cost is reduced by 10%.
Proposed correction:
-
The total manufacturing cost is calculated by:
Total Cost = Manufacturing Cost x Quantity Sold.
Replacing, €120 x 1500 = €180.
The total manufacturing cost is €180. -
The unit margin is determined by:
Unit margin = Selling price excluding tax – Manufacturing cost.
As a replacement, €320 – €120 = €200.
The unit margin is €200. -
The overall margin is calculated by:
Overall margin = Unit margin x Quantity sold.
Replacing, €200 x 1500 = €300.
The overall margin is €300.
-
The markup rate is calculated with the formula:
Mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€320 – €120) ÷ €320) x 100 = 62,5%.
The markup rate is 62,5%. -
The new unit margin with a 10% reduction in cost is:
New manufacturing cost = Manufacturing cost x (1 – 0,10).
Replacing, €120 x 0,90 = €108.
New unit margin = €320 – €108 = €212.
The cost reduction improves the unit margin to €212.
Formulas Used:
| Title | Formulas |
|---|---|
| Total cost | Manufacturing cost x Quantity sold |
| Unit margin | Selling price excluding VAT – Manufacturing cost |
| Overall margin | Unit margin x Quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New cost | Manufacturing cost x (1 – % discount) |
Application: Elegance Mode
States :
Mode Elegance is a fashion brand specializing in the sale of luxury handbags. They are looking to assess the profitability of their latest range. The cost of raw materials for each bag is €150, and the manufacturing cost is €50. The selling price excluding VAT is €400. Currently, 200 bags have been sold. Mode Elegance is considering a 15% reduction campaign on the selling price to stimulate sales.
Work to do :
- Calculate the total cost of raw materials and manufacturing for all bags sold.
- Determine the unit margin.
- Calculate the overall margin achieved on this range.
- Determine the margin rate.
- Evaluate the impact of a 15% reduction in selling price on unit margin.
Proposed correction:
-
The total cost of raw materials and manufacturing is calculated by:
Total Cost = (Material Cost + Manufacturing Cost) x Quantity Sold.
Replacing, (€150 + €50) x 200 = €40.
The total cost is €40. -
The unit margin is calculated by:
Unit margin = Selling price excluding tax – (Cost of materials + Manufacturing cost).
Replacing, €400 – (€150 + €50) = €200.
The unit margin is €200. -
The overall margin is determined by:
Overall margin = Unit margin x Quantity sold.
Replacing, €200 x 200 = €40.
The overall margin is €40.
-
The margin rate is calculated using the formula:
Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Substituting, ((€400 – (€150 + €50)) ÷ (€150 + €50)) x 100 = 100%.
The margin rate is 100%. -
The impact of a 15% reduction is assessed by:
New PV HT = PV HT x (1 – 0,15).
Replacing, €400 x 0,85 = €340.
New unit margin = €340 – (€150 + €50) = €140.
The unit margin after reduction would be €140, and this would reduce unit profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Total cost | (Material Cost + Manufacturing Cost) x Quantity Sold |
| Unit margin | Selling price excluding VAT – (Cost of materials + Manufacturing cost) |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New PV HT | PV HT x (1 – Reduction percentage) |
Application: FitnessLux Equipment
States :
FitnessLux Equipment, which sells high-end fitness equipment, wants to better understand its financial performance for strength training equipment. The manufacturing cost of each unit is €500, and the selling price excluding VAT is €1. The company has sold 200 units. They also want to assess the impact of a 300% increase in manufacturing costs.
Work to do :
- Calculate the total manufacturing cost for all units sold.
- Determine the unit margin for each piece of equipment sold.
- Calculate the overall margin obtained by FitnessLux.
- Determine the markup rate.
- Analyze the impact of a 10% increase in manufacturing cost on unit margin.
Proposed correction:
-
The total manufacturing cost is determined by:
Total Cost = Manufacturing Cost x Quantity Sold.
Replacing, €500 x 300 = €150.
The total manufacturing cost is €150. -
The unit margin is calculated using:
Unit margin = Selling price excluding tax – Manufacturing cost.
Replacing, €1 – €200 = €500.
The unit margin is €700. -
The overall margin is calculated by:
Overall margin = Unit margin x Quantity sold.
Replacing, €700 x 300 = €210.
The overall margin is €210.
-
The markup rate is calculated using the formula:
Mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Substituting, ((€1 – €200) ÷ €500) x 1 = 200%.
The markup rate is 58,33%. -
To assess the impact of a 10% increase in manufacturing cost:
New Manufacturing Cost = Manufacturing Cost x (1 + 0,10).
Replacing, €500 x 1,10 = €550.
New unit margin = €1 – €200 = €550.
The increase in manufacturing cost reduces the unit margin to €650.
Formulas Used:
| Title | Formulas |
|---|---|
| Total cost | Manufacturing cost x Quantity sold |
| Unit margin | Selling price excluding VAT – Manufacturing cost |
| Overall margin | Unit margin x Quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New cost | Manufacturing cost x (1 + % increase) |
Application: GreenThumb Garden Center
States :
GreenThumb Garden Center, which specializes in selling indoor plants, wants to analyze the effectiveness of its sales of green plants. The purchase cost per plant is €10, and the selling price excluding tax is €25. The company has sold 1200 plants. They are planning a promotion with a 20% discount on the selling price.
Work to do :
- Calculate the total purchase cost for all plants sold.
- Determine the unit margin per plant.
- Calculate the overall margin achieved by the company.
- Determine the markup rate.
- Analyze the impact of a 20% reduction in the net selling price on the unit margin.
Proposed correction:
-
The total purchase cost is calculated by:
Total cost = Purchase cost x Quantity sold.
Replacing, €10 x 1200 = €12.
The total purchase cost is €12. -
The unit margin is calculated using:
Unit margin = Selling price excluding VAT – Purchase cost.
As a replacement, €25 – €10 = €15.
The unit margin is €15. -
The overall margin is calculated by:
Overall margin = Unit margin x Quantity sold.
Replacing, €15 x 1200 = €18.
The overall margin is €18.
-
The markup rate is calculated with the formula:
Mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€25 – €10) ÷ €25) x 100 = 60%.
The markup rate is 60%. -
To analyze the impact of a 20% reduction on the selling price excluding tax:
New PV HT = PV HT x (1 – 0,20).
Replacing, €25 x 0,80 = €20.
New unit margin = €20 – €10 = €10.
After reduction, the unit margin would decrease to €10, which would affect profitability.
Formulas Used:
| Title | Formulas |
|---|---|
| Total cost | Purchase cost x Quantity sold |
| Unit margin | Selling price excluding VAT – Purchase cost |
| Overall margin | Unit margin x Quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New PV HT | PV HT x (1 – Reduction percentage) |
Application: BioFresh Market
States :
BioFresh Marché, a supermarket specializing in organic products, wants to optimize its sales prices for its ranges of organic fruit juices. Each bottle has a purchase cost of €2 and sells for €4,5 excluding VAT. They have sold 5000 units. The company plans to diversify its prices by increasing the sales price by 10%.
Work to do :
- Calculate the total cost of purchasing all bottles sold.
- Determine the unit margin of each bottle.
- Calculate the overall margin made on these sales.
- Determine the markup rate.
- Evaluate the impact of a 10% increase in the net selling price on the unit margin.
Proposed correction:
-
The total purchase cost is calculated by:
Total cost = Purchase cost x Quantity sold.
Replacing, €2 x 5000 = €10.
The total purchase cost is €10. -
The unit margin is calculated by:
Unit margin = Selling price excluding VAT – Purchase cost.
As a replacement, €4,5 – €2 = €2,5.
The unit margin is €2,5. -
The overall margin is calculated by:
Overall margin = Unit margin x Quantity sold.
Replacing, €2,5 x 5000 = €12.
The overall margin is €12.
-
The markup rate is calculated by:
Mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€4,5 – €2) ÷ €4,5) x 100 = 55,56%.
The markup rate is 55,56%. -
To assess the impact of a 10% increase in the net selling price:
New PV HT = PV HT x (1 + 0,10).
Replacing, €4,5 x 1,10 = €4,95.
New unit margin = €4,95 – €2 = €2,95.
The price increase would increase the unit margin to €2,95.
Formulas Used:
| Title | Formulas |
|---|---|
| Total cost | Purchase cost x Quantity sold |
| Unit margin | Selling price excluding VAT – Purchase cost |
| Overall margin | Unit margin x Quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New PV HT | PV HT x (1 + Percentage increase) |
Application: Lugo Design
States :
Lugo Design is a furniture company that produces and sells designer tables. The production cost is €200, and each table is sold at a price excluding VAT of €500. A recent order sold 250 tables. The company plans to reduce the production cost by 5% through technological improvements.
Work to do :
- Calculate the total production cost for all tables sold.
- Determine the unit margin for each table.
- Calculate the overall margin achieved.
- Determine the margin rate.
- Analyze the impact of reducing production cost by 5% on unit margin.
Proposed correction:
-
The total production cost is calculated by:
Total cost = Production cost x Quantity sold.
Replacing, €200 x 250 = €50.
The total production cost is €50. -
The unit margin is obtained using:
Unit margin = Selling price excluding tax – Production cost.
As a replacement, €500 – €200 = €300.
The unit margin is €300. -
The overall margin is determined by:
Overall margin = Unit margin x Quantity sold.
Replacing, €300 x 250 = €75.
The overall margin achieved is €75.
-
The margin rate is calculated using:
Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€500 – €200) ÷ €200) x 100 = 150%.
The margin rate is 150%. -
The impact of a 5% reduction in production cost is calculated by:
New production cost = Production cost x (1 – 0,05).
Replacing, €200 x 0,95 = €190.
New unit margin = €500 – €190 = €310.
The drop in production costs increases the unit margin to €310.
Formulas Used:
| Title | Formulas |
|---|---|
| Total cost | Cost of production x Quantity sold |
| Unit margin | Selling price excluding VAT – Production cost |
| Overall margin | Unit margin x Quantity sold |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New cost | Production cost x (1 – % reduction) |
Application: Alokin Bike
States :
Alokin Vélo, a company distributing eco-friendly bicycles, is looking at its sales performance for its latest model. The purchase cost of each bicycle is €300, while it is sold at €600 excluding VAT. 400 units have been sold. The company wants to measure the effect of a 10% drop in the selling price on the margin.
Work to do :
- Calculate the total purchase cost for all units sold.
- Determine the unit margin obtained for each bicycle.
- Calculate the overall margin from the sale of the bikes.
- Determine the markup rate.
- Evaluate the impact of a 10% drop in the net selling price on the unit margin.
Proposed correction:
-
The total purchase cost is determined by:
Total cost = Purchase cost x Quantity sold.
Replacing, €300 x 400 = €120.
The total purchase cost is €120. -
The unit margin is calculated using:
Unit margin = Selling price excluding VAT – Purchase cost.
As a replacement, €600 – €300 = €300.
The unit margin is €300. -
The overall margin is obtained by:
Overall margin = Unit margin x Quantity sold.
Replacing, €300 x 400 = €120.
The overall margin achieved is €120.
-
The markup rate is determined by:
Mark rate = ((PV HT – PA HT) ÷ PV HT) x 100.
Replacing, ((€600 – €300) ÷ €600) x 100 = 50%.
The markup rate is 50%. -
The impact of a 10% drop in the net selling price is calculated by:
New PV HT = PV HT x (1 – 0,10).
Replacing, €600 x 0,90 = €540.
New unit margin = €540 – €300 = €240.
The price drop reduces the unit margin to €240.
Formulas Used:
| Title | Formulas |
|---|---|
| Total cost | Purchase cost x Quantity sold |
| Unit margin | Selling price excluding VAT – Purchase cost |
| Overall margin | Unit margin x Quantity sold |
| Brand taxes | ((PV HT – PA HT) ÷ PV HT) x 100 |
| New PV HT | PV HT x (1 – Percentage drop) |
App: Gourmet Delights
States :
Gourmet Delights is a gourmet caterer that prepares meals for exclusive events. Each meal has a preparation cost of €25, and the selling price excluding VAT is €60. At a recent event, 800 meals were served. They are planning a promotional strategy with a 20% discount on the selling price excluding VAT.
Work to do :
- Calculate the total preparation cost for all meals served.
- Determine the unit margin per meal served.
- Calculate the overall margin obtained on this occasion.
- Determine the margin rate.
- Analyze the impact of a 20% discount on the net selling price on the unit margin.
Proposed correction:
-
The total cost of preparation is calculated by:
Total cost = Preparation cost x Quantity served.
Replacing, €25 x 800 = €20.
The total cost of preparation is €20. -
The unit margin is obtained thanks to:
Unit margin = Selling price excluding tax – Preparation cost.
As a replacement, €60 – €25 = €35.
The unit margin is €35. -
The overall margin is calculated by:
Overall margin = Unit margin x Quantity served.
Replacing, €35 x 800 = €28.
The overall margin is €28.
-
The margin rate is calculated by:
Margin rate = ((PV HT – PA HT) ÷ PA HT) x 100.
Replacing, ((€60 – €25) ÷ €25) x 100 = 140%.
The margin rate is 140%. -
The impact of a 20% discount is assessed by:
New PV HT = PV HT x (1 – 0,20).
Replacing, €60 x 0,80 = €48.
New unit margin = €48 – €25 = €23.
With the discount, the unit margin would be €23, which would significantly reduce profitability per meal.
Formulas Used:
| Title | Formulas |
|---|---|
| Total cost | Preparation cost x Quantity served |
| Unit margin | Selling price excluding VAT – Preparation cost |
| Overall margin | Unit margin x Quantity served |
| Margin rate | ((PV HT – PA HT) ÷ PA HT) x 100 |
| New PV HT | PV HT x (1 – Discount percentage) |