Unit Cost and Wastage

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Unit Cost and Wastage.

The Unit cost is how much each product costs to manufacture when made using mass production, e.g. how much it costs to manufacture one Sony PSP, or one bottle of coca cola. The less it costs to make each unit, the more efficient the business is.

Wastage is the amount of money spent on faulty products. Poor quality products lead to wastage, which in turn leads to higher unit costs. Revenue is lost when sales are lost, therefore reducing wastage improves efficiency, and overall profit.