Formula
Cost per Unit = Total Production Cost ÷ Total Units Produced
Calculation Example
If a company spends $500,000 to produce 10,000 units, Cost per Unit = 500,000 ÷ 10,000 = $50
Data Source
ERP Systems, Financial Reports, Cost Accounting Software
Tracking Frequency
Weekly, Monthly, Quarterly
Optimal Value
Lower is better while maintaining quality.
Minimum Acceptable Value
A high cost per unit suggests inefficiencies in production.
Benchmark
Industry benchmarks: Manufacturing ~$10-100 per unit, Electronics ~$20-200 per unit
Recommended Chart Type
Bar chart (to compare product lines), Line chart (to track cost trends)
How It Appears in Reports
Displayed in financial and production reports to assess cost efficiency.
Why Is This KPI Important?
Indicates production cost efficiency and profitability.
Typical Problems and Limitations
Does not account for fluctuations in raw material costs.
Actions for Poor Results
Improve production efficiency, negotiate better supplier pricing, optimize automation.
Related KPIs
Production Efficiency, Inventory Turnover, Gross Profit Margin
Real-Life Examples
A manufacturer reduced cost per unit from $75 to $50 by switching to a more efficient supply chain.
Most Common Mistakes
Focusing only on cost per unit without ensuring product quality.
