Step 1: Define density.
Density is defined as mass per unit volume.
Step 2: Recall the SI units for mass and volume.
In the International System of Units (SI):
The SI unit of mass is the kilogram (kg).
The SI unit of length is the meter (m).
The SI unit of volume, derived from length, is cubic meter (m$^3$).
Step 3: Determine the SI unit of density.
Since density = mass / volume, the SI unit of density will be the SI unit of mass divided by the SI unit of volume.
SI unit of density = $\text{kilogram} / \text{cubic meter} = \text{kg/m}^3$.
Step 4: Evaluate the given options.
(1) Kg/cm$^3$: This uses kilograms for mass, but cubic centimeters for volume, which is not the SI unit of volume.
(2) Kg/m$^3$: This uses kilograms for mass and cubic meters for volume, which are both SI units. This is the correct SI unit for density.
(3) g/m$^3$: This uses grams for mass, which is a common unit for mass but not the base SI unit (kilogram is).
(4) g/cm$^3$: This uses grams for mass and cubic centimeters for volume. Both are common units but not the primary SI units for density.
(2) Kg/m$^3$