"Cost per unit" refers to the total expense incurred to produce one individual item of a product. This figure is calculated by dividing the total production costs, which include materials, labor, and overhead, by the number of units produced. Understanding this metric helps businesses determine pricing strategies and profitability. For example, if a company spends $1,000 to produce $100 units, the cost per unit would be $10. This information is crucial for businesses to assess their efficiency and make informed decisions about scaling production or adjusting prices in the market.