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An organisation operates a piecework system of remuneration, but also guarantees its employees 80% of a time-based rate of pay which is based on $20 per hour for an eight hour working day. Three minutes is the standard time allowed per unit of output. Piecework is paid at the rate of $18 per standard hour.
If an employee produces 200 units in eight hours on a particular day, what is the employee’s gross pay for that day?
The correct answer is 180, but I am not sure how to work out this.
This question is from ACCA specimen exam, I was wondering if it is the same level of difficulty between the specimen exam and real exam? Many thanks.
They are guaranteed pay of 80% x 8 hours x $20 per hour = $128.
If the piecework comes to a higher amount then they will be paid the higher amount.They produced 200 units, the time allowed is 3 minutes per unit, and so the standard time is 200 x 3/60 = 10 hours.
Piecework is paid at $18 per hour, and therefore the pay is 10 hours x $18 = $180.Since this is more than the guaranteed pay, they will be paid $180.
The specimen exam is exactly the same level of difficulty as the real exam.
I assume that you have a Revision Kit from one of the ACCA approved publishers (if not you must buy one) – they are full of exam standard questions for practice, and practice is vital to passing the exam.I also suggest that you watch my free lectures. They are a complete free course and cover everything needed to be able to pass the exam well.
Hi, John. Thank you very much for your explanation. I did not realise this is included in the BPP mock test. Sorry. I have been doing some practice regarding performance analysis and I am getting bit confused about fixed overhead cost. I was wondering if it is correct to say fixed overhead changes along with the activity level regardless absorption cost& marginal cost method applied? Thank you
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