Result
Cost per unit
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
Cost per unit = materials + direct labor + overhead per unit. These are the three classic categories of production cost in management accounting.
Materials and direct labor are usually straightforward — how much raw material and work time went into one unit. Overhead is trickier: it's the shared cost of running the shop or plant (rent, electricity, equipment depreciation, supervisor salary) that has to be allocated across every unit produced — and the result can shift noticeably depending on the allocation base chosen (machine hours, labor hours, output volume).
Product cost feeds directly into gross profit and margin calculations: product cost × units sold ≈ cost of goods sold (COGS) for the gross profit and gross margin calculators.