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Companies include this figure on their financial statement.

Cost per unit, also referred to the cost of goods sold or the cost of sales, is how much money a company spends on producing one unit of the product they sell. Service-based businesses can use a cost per unit for their business too, but it is usually a little less straightforward of a calculation. Read more: A Complete Guide To Economies of Scale What is cost per unit?Ĭost per unit is a calculation that many product-based businesses use, from smaller local stores to national corporations. In this article, we discuss what a cost per unit is, why it's important, how to calculate it and provide an example of a cost per unit calculation. Owners, managers and analysts work on adjusting the cost per unit to meet sales goals. For both product and service-based businesses, the cost per unit is a valuable calculation to make sure their costs are lower than what a unit sells for. Cost Per Unit = (Total Fixed Costs + Total Variable Costs) / Total Units ProducedĪ successful business relies on being able to make a profit.