How to include wastage in cost per saleable unit

Use the output you can sell

A batch cost belongs across the usable output of that batch. If you buy or make 100 items and only 90 are saleable, dividing the cost by 100 makes each sold item look cheaper than it really is. Record rejects and ordinary process loss alongside the batch's materials and labour.

With £150 total batch cost and 80 saleable units, the precise cost is £1.875 per unit. The tool displays £1.88, while the product engine accepts finer decimal inputs where useful. Saleable output is the important denominator; ordered quantity alone is not enough.

Distinguish ordinary waste from a separate incident

Regular trimming, breakages or failed output can belong in the normal batch cost assumption. A one-off damaged shipment or unusual production failure may be better kept as a separately documented scenario, rather than making every future batch appear to suffer the same loss.

Use a method that can be reconciled with records. If you have already divided the total cost across reduced saleable output, do not also add the full waste amount to each unit. That would charge the same loss twice.

Check whether yield or buying price caused the increase

At a £150 batch cost, 100 usable units cost £1.50 each; 80 cost £1.875; 60 cost £2.50. An unchanged supplier bill can therefore produce a higher unit cost when output falls. Compare yield as well as purchase price when reviewing the product.

Keep precise calculations until the point where money is displayed or charged. Eighty units at the displayed £1.88 total £150.40, while eighty at the precise £1.875 total £150. Use a consistent precision policy and explain small display-rounding differences.

Before you use the result

• Record total delivered batch cost.
• Count usable output after ordinary losses.
• Keep making time in the batch where relevant.
• Do not add waste again after allowing for reduced yield.
• Retain suitable precision before final money rounding.

Common questions