Unit Cost

• The average cost of producing a single unit of output
• Unit costs = Total costs / output
• Asset sweating
• Number of units produced influences UC

  • spreads fixed costs
  • negotiate discounts with suppliers
  • greater use of assets
• Labour productivity influences UC

  • efficiency of the workforce
  • use of workforce hours
• Suppliers influences UC

  • Cost of inputs
• Material usage influences UC

  • Wastage
• The use of unit cost data

  • are avg costs rising or falling?
  • look to change suppliers
  • can inputs be utilised for efficiently?
  • inform pricing decisions
  • is waste being managed efficiently?