Enter the direct materials cost, direct labor costs, and the factory overhead, and total units produced to calculate the unit product cost.

Unit Product Cost Formula

The following equation is used to calculate a unit product cost. 

C = ( 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

To calculate a unit product cost, sum the material, labor, and overhead costs, then divide by the number of units produced.

Unit Product Cost Definition

A unit product cost is defined as the total cost per unit that it takes to produce a good.

Unit Product Cost Example

How to calculate a unit product cost?

  1. First, determine the direct material costs.

    These are the costs of materials used to produce the goods.

  2. Next, determine the direct labor costs.

    Calculate the direct labor costs.

  3. Next, determine the factory overhead.

    Calculate the factory overhead that was used to make the product.

  4. Next, determine the total number of units produced.

    Measure the total number of units.

  5. Finally, calculate the unit product cost.

    Use the equation above to calculate the unit product cost.

FAQ

What is a unit product cost?

A unit product cost is a total cost per unit that it takes to manufacture a product.