Ascertainment of cost per unit is one of the main functions of cost accounting. Accordingly each economic activity has to be measured and expressed in identifiable units for costing purpose. Such unit may be as follows:
(i) Unit of product (cost per table)
(ii) Unit of time (cost per hour)
(iii) Unit of weight (cost per kilogram)
(iv) Unit of measurement (cost per meter)
(v) Operating unit of service (cost per running kilometer for vehicles)
Thus, cost unit is a unit of product, service or time in terms of which cost is ascertained or expressed. But the selection of cost unit must be proper and appropriate. An ideal cost unit should be (a) convenient for cost ascertainment, (b) easier to associate expenses and (c) in accordance to the nature and practice of business.