Average Unit Cost (AUC) Formula
How apparel buyers and merchandisers calculate average unit cost — the simplest signal of sourcing discipline at the category level.
What Average Unit Cost measures
AUC is the average landed cost per unit across a buy or an inventory position. Paired with AUR, it frames the margin question at a category level.
AUC = COGS ÷ Units Sold (or Inventory at Cost ÷ Units On Hand)AUC drift over time is one of the first signals of cost creep in sourcing — fabric substitutions, factory changes, freight surcharges.
Worked apparel example
A department bought 3,000 units at $96,000 total landed cost.
AUC = $96,000 ÷ 3,000 = $32.00
Compare to the target cost baked into the line plan. $32 against a $30 target is 6.7% cost creep — two points of IMU vanished before the season started.
AUC is $32.00 per unit. Compare to target cost from line-plan — drift up means cost creep in sourcing, drift down often means spec compromise.
Failure modes we see
AUC reviewed only against total COGS. Merchandising reviews COGS quarterly; AUC against plan is never a dashboard. Cost creep builds cumulatively, compressing margin silently until the end-of-season gross margin miss.
How RetailNorthstar handles AUC
AUC runs at category, class, and style level against the line-plan target. Factory-level cost variance is isolated and attributed — so the merchandiser can see which vendor's prices drifted, not just that "costs went up."
Related formulas
- Average Unit Retail — the selling side
- Target Costing — the planned ceiling
- COGS — the total cost roll-up
See AUC drift flagged against line-plan target — vendor by vendor.
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