Cost unit is a type of cost object representing a quantity or unit of product or service, for which costs are ascertained.
Different cost units may be applicable in different situations – it depends on the nature of products and production process.
Cost unit is not the same as unit cost. Unit cost is the cost per unit of product (service).
Examples of cost units
- for production that is repetitive and only a few types of similar products are manufactured in masses:
- package of cigarettes
- single product (e.g. lamp)
- ton of coil
- for providing a service:
- transportation: passenger kilometers
- sewage disposal plant: m3 of water cleaned
- accommodation facilities or hospitals: occupied bed per night
- separate job (job costing) – e.g. a single piece of tailor-made furniture
- separate contract (contract costing) – e.g. a house of flats built
- separate production batch (batch costing) – e.g. batch consisting of approx. 100 rolls