Legal Definitions - unit cost

Definition: The cost of a single unit of a product or service; the total manufacturing cost divided by the number of units.

Example: A company produces 1000 units of a product at a total cost of $10,000. The unit cost would be $10,000 divided by 1000 units, which equals $10 per unit.

This example illustrates how unit cost is calculated by dividing the total cost of production by the number of units produced. This calculation helps businesses determine the cost of producing each unit of a product or service, which is important for pricing decisions and profitability analysis.