Measures the total cost incurred to produce one unit of product, including raw materials, labor, and overhead.

What it Measures ?

How much it costs to make one product.

Relevant StakeHolders 

Finance Team, Plant Head

Why it Matters ?

Tracks production cost efficiency.

In-depth Use Case / Real-world Example

Production Cost per Unit is a crucial metric to understand how much it costs to make one product. It includes all costs, such as direct materials, labor, and manufacturing overhead. For instance, if a factory spent ₹500,000 to produce 10,000 units, the cost per unit is ₹50. This KPI helps companies identify cost-saving opportunities, such as reducing material waste or improving labor efficiency. If a company is experiencing higher-than-average production costs, it might consider sourcing cheaper raw materials, optimizing labor allocation, or automating certain steps to reduce manual intervention. It directly affects profit margins, making it critical to monitor for profitability improvement.