Correcting a backbow on a guitar with single action truss rod - Duration: 4:25. Paul Doyle 2,591 views
The cost per unit is commonly derived when a company produces a large number of identical products. The cost is derived from the variable costs and fixed costs incurred by a production process, divided by the number of units produced.
For example, if the business above produced 500,000 units of its product that year, its unit variable cost is (155,000 / 500,000) or $0.31. 1  The unit variable cost is simply the variable cost per unit produced. 2  It is the extra cost incurred by producing each additional unit. This is because fixed costs are now being spread thinner across a larger production volume. 2  For example, if the business above spends $50,000 per year in rent, rent costs are allocated to each unit at $0.10 per unit.