Calculating the unit product cost is essential for manufacturers to determine the total cost to produce a single unit of a product. This helps in pricing products accurately, optimizing resources, and improving profitability.

## How to Calculate Unit Product Cost

Follow these steps to calculate the unit product cost:

- Enter the total cost of direct materials used in production.
- Input the total cost of direct labor involved in production.
- Enter the manufacturing overhead costs.
- Provide the total number of units produced.
- Click 'Calculate Unit Cost' to get the cost per unit.

### Formula Used

The following formula is used to calculate the unit product cost:

**Unit Product Cost = (Direct Materials + Direct Labor + Manufacturing Overhead) ÷ Units Produced**

This formula adds the direct costs of materials and labor with overhead costs, then divides the total by the number of units produced to find the cost per unit.

### Example Calculation

For example, if the direct materials cost $5,000, the direct labor costs $3,000, and the overhead costs $2,000 for 500 units, the calculation would be:

**Unit Product Cost = ($5,000 + $3,000 + $2,000) ÷ 500 = $20 per unit**