# determine the mean cost per unit

I have N orders. Each order consist of x units and I know the total cost of each order. If I would like to determine the mean cost per unit do I use approach 1 or 2 listed as follows:

(1) Determine total number of orders X and total cost of all orders Y. Then divide Y by X to determine the cost per unit.

(2) For each order divide the order cost by the number of units of the order resulting in X1. Then take the mean of X1.

• Why not decide yourself? For instance, suppose you have just two orders: one for one unit at $\$100$and another for$100$units at$\$100$. You have thereby sold $101$ units for $\$200$. Do you want to use the average cost per unit of$(100/1+100/100)/2=\$50.5$ or $200/101 \approx \$2$? They are both perfectly fine but they mean different things. – whuber Jan 7, 2016 at 21:44 • Sorry but what's the difference in meaning? I would like to know how much I have to pay on average per unit given all orders/samples. Jan 7, 2016 at 21:58 • I constructed this hypothetical scenario to help make the answer obvious: would you have paid$\$50$ per unit or $\$2\$ per unit on average?
– whuber
Jan 7, 2016 at 22:28
• I understand. Your example is more an outlier situation. I think 2 is more appropriated for my scenario as i would like to know how much a unit costs per order on average. See also answer by Dirk Horsten Jan 7, 2016 at 22:49