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Variable cost

This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.

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October 8, 2018 at 1:10 pm #476820
rihaam
Member
- Topics: 53
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Under which of the following labour remuneration methods will direct labour cost always be a variable cost?
a. Day rate
b. Piece rate
c. Differential piece rate
d. Group bonus scheme
The answer given is piece rate but I didn’t get the reason behind it.Need ur guidance. Thanks
October 8, 2018 at 6:08 pm #476845
John Moffat
Keymaster
- Topics: 57
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Piece rate is where labour is paid based on the number of items produced. So it is truly variable – more items means more pay, and fewer items means lesser pay.
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