Piece Rate System - Free MCQ Practice Test with solutions, B Com Cost Accounting

Under the piece wage system, wages are determined based on the output of a worker, not on the time taken to complete a task. Workers are paid a fixed rate for each unit produced, job completed, or operation performed. This system provides an incentive for workers to increase their output in order to earn higher wages.

One of the advantages of the piece wage system is that less supervision is required. Since workers are paid based on their output, they are motivated to continue working without the need for constant supervision. This can lead to increased productivity and efficiency in the workplace.

In the piece rate system, the decreasing piece rate is a type of piece rate where the rate per unit decreases with an increase in output. This is often used when quality is of great consideration and serves as a way to discourage negligence by workers. As the production output increases, the rate per unit decreases.

One limitation of the piece wage system is that workers may prioritize quantity over quality. Since their wages are directly linked to the number of units produced, they may be less concerned about the quality of the goods or products they are producing. This can result in a decrease in the overall quality of the output.

One advantage of the piece wage system is that wages are linked to the efforts put in by the workers. The more effort a worker puts in and the higher their output, the higher their wages will be. This provides an incentive for workers to strive for increased productivity.

Trade unions often oppose the piece-rate system because it encourages rivalry among workers. Since wages are directly linked to output, workers may compete with each other to increase their production and earn higher wages. This can lead to a sense of disharmony and disunity among the workers.

The piece rate system is not suitable for beginners because they may not have the experience or skills to produce a high quantity of goods/products. Since their rate of production will be low, they may earn significantly lower wages compared to experienced workers. This can discourage beginners from working efficiently.

One limitation of the piece wage system is that it can lead to the deterioration of workers' health. Workers may push themselves to work beyond their capacity in order to increase their output and earn higher wages. This can have adverse effects on their physical and mental well-being.