Question

Why do accountants normally calculate cost per unit as an average?

Answer 1

The reasons are as below as to why accountants normally calculate cost per unit as an average:

1. To determine the exact cost of the unit is not possible and will involve tremendous book keeping effort which certainly is not realistic.

2. The manufacturing costs incurred for the products cannot be precisely traced to each individual units.

3. Although firms may produce the a substantial volume of the same /similar product , the inputs vary quite significantly making it difficult to have the same cost for each unit produced.