The Establishment of a Piece Rate System Can Lead to Increased

question 70

Multiple Choice

The establishment of a piece rate system can lead to increased productivity and higher quality work if:
I. the piece rate is considerably higher than existing wages.
II. the workers are held responsible for the jobs that they personally complete.
III. there is a reliable measure of quality control.

• A) I only
• B) II and III only
• C) III only
• D) I, II, and III

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Definitions:

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products or job orders based on a specific activity base, such as labor hours or machine hours.

Machine-Hours

A measure of the amount of time a machine is operated within a given period.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production process.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs to products based on a predetermined activity base.