ACCA Applied Knowledge · Management Accounting · Accounting for material, labour and overheads
Worker A is paid under a piece-rate scheme with a guaranteed minimum weekly wage of $360. The piece rate is $0.80 per unit. In week 1 A produces 400 units and in week 2 produces 520 units. What is A's total pay for the two weeks?
Total pay is $736. In week 1 output earns only $320, so the $360 guaranteed minimum applies; in week 2 output earns $416, which exceeds the guarantee. Adding $360 and $416 gives $736.
- A$736Correct
- B$720
- C$776
- D$816
Explanation
Week 1: 400 x 0.80 = $320, which is below the guarantee, so $360 is paid. Week 2: 520 x 0.80 = $416, above the guarantee. Total = 360 + 416 = $736. Using $320 for week 1 would give $736 minus 40 = $696 error, and ignoring the guarantee is wrong.
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