unit cost
Noun: - The calculated cost for a given single unit of a product or service: This is the total expenditure incurred to produce, purchase, or provide one individual item or standard measure of something. It is typically determined by dividing the total cost by the number of units produced, purchased, or sold.
The term "unit cost" is used in business, economics, accounting, and manufacturing to analyze efficiency, set prices, and evaluate profitability. It refers to the cost attributable to a single, standard item. - The unit cost includes materials, labor, and overhead. - We need to reduce our unit cost to remain competitive.
In Manufacturing:
- The factory manager analyzed the unit cost to find areas for savings.
- A lower unit cost allows for a higher profit margin per item sold.
In Purchasing:
- When comparing suppliers, always check the unit cost, not just the total price.
- The unit cost for bulk orders is significantly lower.
In Services:
- For the consulting firm, the unit cost is calculated per billable hour.
"to drive down unit costs": to implement strategies to reduce the cost per individual unit.
- Automation helped the company drive down unit costs.
"unit cost analysis": the process of examining all components that contribute to the cost of a single unit.
- A thorough unit cost analysis revealed inefficiencies in the supply chain.
- Average Cost: Often used synonymously with unit cost, especially when referring to the mean cost per unit over a production run.
- Cost per Unit: A direct synonym for unit cost.
- Marginal Cost: The cost of producing one additional unit, which is a related but distinct economic concept.
- Cost per unit
- Average cost (in many contexts)
- Per-item cost
- Total cost: The aggregate cost for all units, as opposed to the cost of one.
- Selling price: The price at which a unit is sold, which is different from its cost.
Unit cost pricing: A pricing strategy where the selling price is based primarily on the unit cost plus a desired profit margin.
- They use a strict unit cost pricing model to ensure profitability.
Unit cost reduction: The goal or process of lowering the expense associated with each unit.
- The project's primary objective is unit cost reduction.
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calculated cost for a given unit of a product
