Materials
Unit Cost
The total expense incurred to produce or procure a single unit of product.
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Updated 2025-10-01
Definition
Unit cost includes manufacturing, labor, materials, overhead, and logistics costs divided by the total number of units produced or purchased.
Overview
Overview
Calculating unit cost is essential for pricing, profitability analysis, and inventory valuation.
Components
- Direct material and labor
- Manufacturing overhead
- Shipping and logistics costs
Example
A company producing 1,000 widgets incurs $50,000 in total costs, resulting in a unit cost of $50 per widget.
Tags
#Unit Cost#Materials#Inventory#Pricing#Manufacturing
Related Terms
Landed Cost
Economic Order Quantity (EOQ)
Weighted Average Cost of Inventory
