CMA Intermediate · Cost Accounting · Employee Costs
In Taylor's differential piece rate system, the normal rate is Rs 10 per piece. Workers reaching or exceeding standard output get 120% of the normal rate on all pieces, and those below standard get 80%. The standard output is 50 units per day. A worker produces 60 units in a day. What are the worker's earnings for the day?
The worker earns Rs 720. Because output of 60 units is above the standard of 50, the higher rate of 120% of Rs 10, which is Rs 12 per piece, applies to every unit produced, giving 60 x Rs 12 = Rs 720.
- ARs 600
- BRs 720Correct
- CRs 500
- DRs 650
Explanation
Since 60 exceeds the standard of 50, the high rate applies to all pieces: 120% of Rs 10 = Rs 12. Earnings = 60 x 12 = Rs 720. Rs 600 uses the normal rate, and Rs 650 wrongly pays the high rate only on the extra pieces.
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