The unit cost is the cost incurred to produce a single unit of a product or provide a single unit of service. It is a key measure in cost accounting and an essential aspect of setting product prices, evaluating efficiency, and determining profitability. The calculation typically involves dividing the total cost of production (including fixed and variable costs) by the total number of units produced. For instance, if a company produces 10,000 units of a product at a total cost of $50,000, the unit cost would be $5 per unit.