$ per unit
It is a number that signifies how much expenses are tied to a single unit of a product being produced. it can be used to forecast expenses as a manufacturing facility continues to grow and allow them to be prepared with the capital needed for growth in the future.
This calculator requires the manufacturing cost to be entered to perform the equation. This number should be the total cost of all manufacturing related expenses. This includes:
Then you will need to enter the total number of units that were produced from that overhead. It is easy to use a year timeframe to determine this. Lets say you calculate your expesnes on the year to be $100,000 and then you check back to see the total number of units produced to be 25,000.
This would mean your manufacturing overhead per unit is $4. You can now use this number to help forecast costs for the years ahead. Let's say you want to produce 50,000 units next year, double the per unit overhead, you can expect next year's expenses to be around $200,000.
There are some expenses that are not icnluded, most notably the cost of rent is often exlcuded. Also, taxes can be omitted.
Finding the cost per unit can help forecast how much will be needed to invest to produce more units in the future, it also can help determine profit margins and overall profitability.
Create Date: July 15, 2024
Last Modified Date: July 15, 2024
