Measuring Your Cost of Production and Profit Margin

Measuring Your Cost of Production and Profit Margin

Jay Parsons

University of Nebraska

The cost of producing one unit of output is extremely important information in any business. It determines your break-even price which, in turn, helps determine pricing decisions and profit margins. It also provides a baseline for comparison to other producers with the same or similar output so you can see how competitive you are at producing the product in question.

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