Are you wondering what the **cost per unit** is? Do you want to know what the difference between the **cost per unit** and **variable cost per unit** is? Or maybe do you want to know the **formulas **for calculating both these costs? You are in the right place! Here you will find the answers to all these questions.

A little introduction – first, we want to focus on the** cost per unit**. You will know what it is and how you can calculate it with the use of the formula. Then we want to focus on the **variable cost per unit**. After a clear explanation, you will also see the formula for this type of cost. So let’s start!

## Cost per unit – what is it?

The **cost per unit** is also known as the **unit price**. What does this term mean? Some products are sold in packages composed of more than 1 item. On the other hand, some products are sold in packages composed of more than 1 particular unit of weight too. If you want to know how much you will pay per 1 item or per 1 particular unit of weight, you need to know the **cost per unit**.

### Cost per unit – the formula

**So how can you calculate the cost per unit?** You need to know the **unit price formula**. You can find it down below:

**The total cost / the number of units = the unit price per item**

So you need to divide the total cost by the number of units to get the cost per unit. It’s a quite simple calculation, isn’t it?

Have a look at the example: You want to buy hair scrunchies. They are packaged in three. The price per whole product is 7$. So how much will you pay per 1 scrunchie?

7$ / 3 = 2.33$

So the cost per unit in this case is equal to 2.33$.

## Variable cost per unit

If you know what the cost per unit is and how the formula for unit price looks, it is time to learn what the **variable cost per unit** is too. The **variable cost per unit **is the price which you need to pay to produce 1 item.

### Variable cost per unit – the formula

So how does the** variable cost per unit formula **look? Let’s see:

**Variable cost per unit = total variable cost / the number of units **

So this time you also need to divide two numbers, but in this case the amount of the total variable cost by the number of units.

Have a look how it works in practice. For instance, you produce pencils. The total variable cost per one month is 20.000$. You produce every month 50.000 pencils. So what is the variable cost per unit?

20 000$ / 50 000 = 0.4$

So the variable cost per unit in this example is equal to 0.4$.

We hope that now you know what the **cost per unit **and **variable cost per unit** are. So it is time for trying these formulas in everyday life. Follow the steps from this article and make your own calculations.