Unit Product Cost Calculator

Formula

The formula to calculate the Unit Product Cost is:

\[ C = \frac{DM + DL + O}{U} \]

Where:

$C$ is the unit product cost
$DM$ is the direct material costs
$DL$ is the direct labor costs
$O$ is the factory overhead costs
$U$ is the total units produced

What is a Unit Product Cost?

A unit product cost is defined as the total cost per unit that it takes to produce a good. This includes the direct material costs, direct labor costs, and factory overhead costs, divided by the number of units produced. It is a critical measure for determining the profitability and pricing of products.

Example Calculation 1

Let's assume the following values:

Direct Material Costs (DM) = $5000
Direct Labor Costs (DL) = $3000
Factory Overhead Costs (O) = $2000
Total Units Produced (U) = 1000

Using the formula:

\[ C = \frac{5000 + 3000 + 2000}{1000} = 10 \text{ dollars per unit} \]

The Unit Product Cost is $10 per unit.

Example Calculation 2

Let's assume the following values:

Direct Material Costs (DM) = $8000
Direct Labor Costs (DL) = $4000
Factory Overhead Costs (O) = $3000
Total Units Produced (U) = 2000

Using the formula:

\[ C = \frac{8000 + 4000 + 3000}{2000} = 7.50 \text{ dollars per unit} \]

The Unit Product Cost is $7.50 per unit.