The Differential Piece Rate System Refers to

question 51

Multiple Choice

The differential piece rate system refers to

• A) an incentive pay plan in which the employer pays the rate per piece based on the difference in performance of employees.
• B) a system that gives employees a bonus if the ratio of labor costs to the sales value of production is below a set standard.
• C) an incentive pay in which the piece rate is higher when a greater amount is produced.
• D) a system of linking pay increases to ratings on performance appraisals.
• E) an incentive pay plan where employees are paid different wages based on the skills they possess.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or volume of output.

Fixed Costs

Expenses that do not change in proportion to the level of production or sales activity within a certain range.

Plantwide Overhead Rate

A single rate used to allocate all of a plant's manufacturing overhead costs to its production activities based on a uniform cost-driver.

Cost Driver

An element that influences the expense of an operation or procedure to vary, utilized in activity-based costing for more precise cost allocation.