This could help
:)
WHAT IT IS:
<span>Cost per unit </span>is a measure of a company's cost to build or create one unit of product.
HOW IT WORKS (EXAMPLE):
For example, let's assume it costs Company XYZ $10,000 to purchase 5,000 widgets that it willresell in its retail outlets. Company XYZ's cost per unit is:
$10,000 / 5,000 = $2 per unit
Often, calculating the cost per unit isn't so simple, especially in manufacturing situations. Usually, costs per unit involve variable costs (costs that vary with the number of units made) and fixed costs(costs that don't vary with the number of units made).
For example, at XYZ Restaurant, which sells only pepperoni pizza, the variable expenses per pizza might be:
Flour: $0.50
Yeast: $0.05
Water: $0.01
Cheese: $3.00
Pepperoni: $2.00
Total: $5.56 per pizza
Its fixed expenses per month might be:
Labor: $1,500
Rent: $3,000
Insurance: $200
Advertising: $500
Utilities: $450
Total: $5,650
If company XYZ sells 10,000 pizzas, then its cost per unit would be:
<span>
Cost per unit = $5.56 + ($5,650/10,000) = $6.125</span>
