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Unit costing refers to the costing procedure, under which costs are accumulated and analyzed under different elements of cost and then cost per unit is ascertained by dividing the total cost by number of units produced. It is ideally used in case of concerns producing a single article on large scale by continuous manufacture. The units of output are identical. The products are homogenous. Concern using single or output costing produces basically one product or two or more grades of one product.
It is not necessary to maintain separate cost accounts under this system. As all the information required can be obtained only by organizing and analyzing the financial accounts. On dividing the total expenditure incurred by the number of units produced, the cost per unit is ascertained.
