cost unit

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A unit of production for which the management of an organization wishes to collect the costs incurred. In some cases the cost unit may be the final item produced, for example a chair or a light bulb, but in other more complex products the cost unit may be a sub-assembly, for example an aircraft wing or a gear box. Cost units may also be expressed as batches of items, particularly when the unit cost of the individual product would be very small; for example, the cost unit for a manufacturer of pens might be the cost per thousand pens. See also cost object.

Subjects: Accounting.

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