Definition of Unit cost:
Expenditure incurred in producing one unit of a good or service, computed usually as average cost.
A unit cost is a total expenditure incurred by a company to produce, store, and sell one unit of a particular product or service. Unit costs are synonymous with the cost of goods sold and the cost of sales.
The cost of producing or purchasing one item of manufacture, calculated by dividing the total expenditure by the total number of items.
This accounting measure includes all of the fixed and variable costs associated with the production of a good or service. Unit cost is a crucial cost measure in the operational analysis of a company. Identifying and analyzing a company’s unit costs is a quick way to check if a company is producing a product efficiently.
How to use Unit cost in a sentence?
- If you want to figure out how much you may make off a shipment you will need to know what the unit cost is.
- A large organization may lower the unit cost through economies of scale.
- Goods-centric unit cost measures will vary between businesses.
- Companies seek to maximize profit by reducing unit costs and optimizing the market offering price.
- The cost is useful in gross profit margin analysis and forms the base level for a market offering price.
- When you are trying to figure out what your total profit might be you will need to know what the unit cost is.
- I wanted to determine the unit cost of the item and see what would happen to our company in the future if we spent too much.
- Generally, unit costs represent the total expense involved in creating one unit of a product or service.
Meaning of Unit cost & Unit cost Definition