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Class 11 Entrepreneurship Notes · CBSE

Unit of Sale, Unit Cost and Unit Price

Unit of Sale, Unit Cost and Unit Price — understand the standard units businesses sell in, how to calculate cost per unit including wastage, and how unit price minus unit cost gives gross profit. CBSE Class 11 Entrepreneurship notes with the tea vendor example and a live gross profit calculator.

Last updated: 10 Sep 2026

Notes

Unit of Sale — Reference Table

Every business measures its sales in a natural unit — a fruit vendor counts kilograms, a lawyer counts hours. Matching the business to its unit of sale is a favourite matching-type question.

Unit of sale depends on the product or service — goods are weighed or counted, services are timed.
BusinessItem being Sold/ServicedUnit of Sale
Fruit VendorAppleKilogram
GrocerRiceKilogram
DairyMilkLitre
GrocerOilLitre
Garment ShopT-ShirtPiece or Number
Textile ShopFabricMeter (of fixed width)
Real Estate DeveloperApartmentSquare Feet (Area)
PlumberPlumbing ServiceTime: Hour
LawyerLegal adviceTime: Hour
ConsultantSpecial adviceTime: Hour
Coaching ClassTuitionTime: Hour
BakerCakeKilogram/pound
BakerVegetable PuffsPiece or Dozen

Why the unit matters

The unit of sale decides what “price per unit” means. A coaching class sells hours — so its unit price is per hour. A baker sells puffs by the piece or the dozen. Mixing up the unit is a guaranteed wrong answer in any unit-economics sum.

Unit Cost — The Tea Vendor Calculation

Unit Cost
The cost incurred by a company to produce, store, and sell one unit of sale of a particular product or service. Refers to variable cost: raw material, packing material, sales commission, freight, etc.

Solved Example

Problem

A tea vendor brews a batch using 1 litre milk (₹ 30), 2 litres water (₹ 2), 300 g sugar (₹ 30), 100 g tea leaves (₹ 20) and fuel (₹ 2). The batch should give 30 cups of 100 ml, but only 28 cups actually come out because of evaporation and spillage. Disposable cups cost 50 paise each. What is the unit cost per cup?

Solution

Unit cost = ₹ 3.50 per cup

The wastage rule

Always divide the batch cost by the actual yield, not the expected yield. A batch of 100 samosas may produce only 95 — the 5 broken ones still cost money, so each of the 95 carries a little more cost. Cafés do the same maths on coffee beans and milk every morning.

Unit Price and Gross Profit

Unit Price
The price at which one unit of sale is sold. The consumer (marketplace) ultimately determines the transaction price.
Gross Profit (Unit Gross Margin)
Excess of Unit Price over Unit Cost — profit before deducting fixed expenses (salaries, rent). Unit Cost (variable cost) is also known as Cost of Goods Sold.
GROSS PROFIT PER UNIT
Gross Profit Per Unit = Unit Price − Unit Cost
Profit before fixed expenses such as salaries and rent

Worked example

Unit cost = ₹ 3; Unit price = ₹ 4 → Gross Profit = 4 − 3 = ₹ 1 per cup. Try the numbers below — a ₹ 4 cup with ₹ 3 of cost leaves exactly ₹ 1 before the stall's rent is touched.

Gross Profit Calculator

Gross Profit per Cup

₹ 1

Unit Price − Unit Cost

Unit Cost: ₹ 3Gross Profit per Cup: ₹ 1

Key Takeaways

Key Takeaways

  • Unit of sale is the natural measurement of a business: kilograms, litres, metres, square feet, hours, pieces, dozens.
  • Unit cost = total batch cost ÷ actual yield — count wastage and divide by what you actually get.
  • Unit price is what the market pays for one unit; the consumer ultimately decides the transaction price.
  • Gross profit per unit = unit price − unit cost — profit before fixed expenses. Unit cost (variable cost) is also called cost of goods sold.
  • So what? — The chai stall outside your college runs this exact sum: ₹ 84 of ingredients → 28 cups → ₹ 3 cost; at ₹ 4 sold, each cup earns ₹ 1 before the stall rent is even touched.