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About this tool
Absorb fixed overheads and variable costs across a production batch to get true cost per unit, contribution and break-even.
Cost per unit is total batch cost divided by the units you can actually sell, so it has to absorb both the variable cost of every unit started and the fixed overhead allotted to the run. This calculator takes batch size, reject rate, the four standard variable cost lines, the period's fixed overhead and how many batches share it, then returns absorption cost per good unit, contribution per unit, break-even volume and the price a target margin requires. It follows the marginal-costing identity contribution = price minus variable cost, with break-even = fixed cost divided by contribution.
Open Cost Per Unit and Batch Cost Calculator on AltFTool — it loads instantly in your browser.
Enter the values you already know.
Fine-tune the options to match your scenario.
Read the result and use it in your planning or reporting.
Material and labour spent on scrapped units are recovered from the good units, which is where most quick estimates go wrong.
Full cost per unit for pricing, contribution per unit for accept-or-reject and break-even decisions.
A table shows the unit cost at half, double and five times the run size, so the overhead effect is visible.
Add total fixed cost allocated to the run and total variable cost, then divide by the number of good units produced. If 1,000 units are started at 75 per unit of variable cost with 60,000 of overhead and 4% are rejected, the total is 135,000 over 960 good units, or 140.63 per unit.
Variable cost per unit covers only what each unit consumes — material, direct labour, packaging — and does not move when volume changes. Cost per unit adds a share of fixed overhead, so it falls as the batch gets larger. Use variable cost for a one-off incremental order and full cost for list pricing.
Divide the fixed cost absorbed by the batch by the contribution per unit, where contribution is selling price minus variable cost per good unit. With 60,000 of fixed cost and 120.88 of contribution the break-even is 497 units. If contribution is zero or negative there is no break-even at that price.
Divide full cost per unit by 0.75, because a margin is expressed on selling price, not on cost. A unit costing 140.63 must sell at 187.50 for a 25% margin. Marking up cost by 25% instead gives 175.79, which is only a 20% margin — a common and expensive mistake.
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