Explanation should include the
- identification of one unit of sale
- cost of producing one unit
- selling price per unit
- way EOU is used to determine profit
- fact that EOU varies from manufacturing to wholesale to retail and service.
Process/Skill Questions:
- How is one unit of sale determined in manufacturing? In retail? In service? In wholesale?
- How is the economics of one unit applied to projecting the profitability of the business as a whole?
- What are the variable costs used in determining the economics of one unit?
- Why is it imperative for a business to understand the cost of goods sold (COGS) when analyzing the EOU?
- Why is it important to consider the cost analysis?