Product unit cost is computed by dividing cost of goods sold by the number of units sold.

Question

Quizplus · Accepted Answer

Product unit cost is computed by dividing the total cost incurred to produce a product by the number of units produced. Cost of goods sold (COGS) is the cost incurred on products sold during a particular period and includes both variable and fixed costs. Therefore, dividing COGS by the number of units sold gives the average cost per unit sold and not the product unit cost.

Product Unit Cost Is Computed by Dividing Cost of Goods