Unit Cost per Batch means dividing the total cost of a batch by the total quantity in that batch.

This method is mainly used in FIFO (First In First Out) inventory control.

• It assumes the goods are non-unique, meaning each unit is interchangeable.
• Inventory is sold in the order it was stocked — the oldest batch goes out first, and the newest stays last.
• The system uses the unit cost per batch when goods are sold, while inventory on hand is valued starting from the newest batch backwards.

FIFO & Unit Cost per Batch – Recap

Formula:

Unit Cost per Batch = Total Cost of a Batch / Quantity in that Batch

Under FIFO, inventory that arrives first (oldest) is used or sold first. This means:

• Oldest batches are removed first from stock.
• Newer batches remain in inventory until older ones are depleted.
• You assign the cost of older inventory to Cost of Goods Sold (COGS) first.

Application to Frozen & Chilled Foods

1. Raw Meat (Pork, Lamb, Turkey – chill Category)

Key Characteristics:

• Short shelf life (often 5–15 days in chilled state).
• High perishability.
• Strict temperature control (0–4°C for chilled).
• High risk of microbial contamination and spoilage.