CA Intermediate · Cost and Management Accounting · Employee Cost and Direct Expenses
Which of the following is a standard, named method of remunerating labour under which the wage rate per unit of output is fixed and the worker's earnings vary directly with output, with no guaranteed minimum?
Straight piece rate system is correct. Under it, a fixed rate per unit is paid, so earnings rise in direct proportion to output with no guaranteed minimum. Time rate pays for time attended, while Halsey and Rowan are premium bonus plans built on time rates.
- AStraight piece rate systemCorrect
- BTime rate system
- CHalsey premium plan
- DRowan premium plan
Explanation
Under straight piece rate, earnings equal units produced multiplied by a fixed rate per unit, so pay moves in direct proportion to output. Time rate pays for hours attended irrespective of output. Halsey and Rowan are premium plans that start from time rate and add a bonus for time saved.
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