{"id":13939,"date":"2022-01-09T18:02:04","date_gmt":"2022-01-09T12:32:04","guid":{"rendered":"https:\/\/scholarsclasses.com\/blog\/?p=13939"},"modified":"2024-12-27T15:02:36","modified_gmt":"2024-12-27T09:32:36","slug":"piece-rate-system","status":"publish","type":"post","link":"https:\/\/scholarsclasses.com\/blog\/piece-rate-system\/","title":{"rendered":"Piece Rate System Advantages and Disadvantages | Free Cost Accounting Articles"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69ed8e27aeec9\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69ed8e27aeec9\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/scholarsclasses.com\/blog\/piece-rate-system\/#Piece_Rate_System\" >Piece Rate System<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/scholarsclasses.com\/blog\/piece-rate-system\/#Meaning\" >Meaning<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/scholarsclasses.com\/blog\/piece-rate-system\/#i_Straight_piece_rate\" >(i) Straight piece rate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/scholarsclasses.com\/blog\/piece-rate-system\/#ii_Piece_rate_with_guaranteed_wages\" >(ii) Piece rate with guaranteed wages<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/scholarsclasses.com\/blog\/piece-rate-system\/#iii_Differential_piece_rate_system\" >(iii) Differential piece rate system<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/scholarsclasses.com\/blog\/piece-rate-system\/#Advantages_of_Piece_Rate_System\" >Advantages of Piece Rate System<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/scholarsclasses.com\/blog\/piece-rate-system\/#Disadvantages_of_Piece_Rate_System\" >Disadvantages of Piece Rate System<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading has-text-align-center\"><span class=\"ez-toc-section\" id=\"Piece_Rate_System\"><\/span><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Piece Rate System<\/mark><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"576\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/01\/Piece-Rate-System-1024x576.jpg\" alt=\"Piece Rate System\" class=\"wp-image-13956 lazyload\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/01\/Piece-Rate-System-1024x576.jpg 1024w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/01\/Piece-Rate-System-300x169.jpg 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/01\/Piece-Rate-System-768x432.jpg 768w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/01\/Piece-Rate-System-1536x864.jpg 1536w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/01\/Piece-Rate-System-640x360.jpg 640w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/01\/Piece-Rate-System.jpg 1920w\" data-sizes=\"(max-width: 1024px) 100vw, 1024px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1024px; --smush-placeholder-aspect-ratio: 1024\/576;\" \/><figcaption class=\"wp-element-caption\">Piece Rate System<\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Meaning\"><\/span><strong>Meaning<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Under this system, each unit, job, operation or process is known as a piece. A piece rate is fixed for each unit or job or operation or process. The workers are paid on the basis of the number of pieces completed irrespective of the time spent by the worker on the job. Payment of overtime or idle time has not arisen in this case. Record of work time and attendance is recorded on the time card, piece work ticket records the output by the workers.<\/p>\n\n\n\n<p>Under this system, wages are paid on the basis of the number of articles produced by the workers. Piece rate system can be of the following types:<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"i_Straight_piece_rate\"><\/span>(i) Straight piece rate<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Under this system, each unit produced is taken as a piece. A piece rate is fixed for a unit of product produced. It can be calculated in the following way:<br><strong>Earning = No. of piece produced x Piece rate<\/strong><\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"ii_Piece_rate_with_guaranteed_wages\"><\/span>(ii) Piece rate with guaranteed wages<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Piece rate with guaranteed wages is applicable for the new and in efficient workers. They earn meagre salary instead of paying normal piece rate and this encourages the workers to improve their efficiency gradually and there afterwards reach the standard of other workers<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"iii_Differential_piece_rate_system\"><\/span>(iii) Differential piece rate system <span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Under this system, the wages of workers vary at different stages, within a certain range of output. The two systems which works under this principle are:<br>(a) Taylor\u2019s differential piece rate system, and<br>(b) Merrick\u2019s differential piece rate system.<\/p>\n\n\n\n<ul style=\"color:#f70505\" class=\"wp-block-list has-text-color\">\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/fifo-full-form\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/fifo-full-form\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"has-inline-color has-vivid-red-color\">First in First out Method (FIFO)<\/span><\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/lifo-meaning\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/lifo-meaning\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"has-inline-color has-vivid-red-color\">Last in First out Method (LIFO)<\/span><\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/simple-average-method\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/simple-average-method\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"has-inline-color has-vivid-red-color\">Simple Average Method<\/span><\/a><\/li>\n\n\n\n<li><span class=\"has-inline-color has-vivid-red-color\"><a href=\"https:\/\/youtu.be\/9Ct9NS3qdEc\" data-type=\"URL\" data-id=\"https:\/\/youtu.be\/9Ct9NS3qdEc\" target=\"_blank\" rel=\"noreferrer noopener\">Weighted Average Method<\/a><\/span><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_Piece_Rate_System\"><\/span>Advantages of Piece Rate System<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>1) It is Simple to calculate wages because Piece Rate is fixed first.<br>2) The wages are calculated on the basis of Pieces of output. Management has not to lose on account of inefficiency or workers.<br>3) The wages are directly linked with output. The workers are motivated to make a good and greater effort of assuring higher income.<br>4) The Labour cost is lower due to higher labour productivity and efficiency and minimization of idle time or overtime.<br>5) Low degree of supervision is required.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Disadvantages_of_Piece_Rate_System\"><\/span>Disadvantages of Piece Rate System<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>1) It is very difficult is fix the piece rate. Many times it is difficult to establish standard output and hence to fix piece rate.<br>2) The worker is neither assured of regular income nor can enjoy social benefits like leave, allowances, etc.<br>3) This method is not suitable in the case of jobs like research repairs, quality control, inspection, etc.<br>4) This method is expensive as it requires additional expenditures for installation and operation.<br>5) If the wages are not guaranteed, the worker, may lose earnings especially when the continuous flow of work can not be maintained.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/introduction-to-cost-accounting\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/introduction-to-cost-accounting\/\" target=\"_blank\" rel=\"noreferrer noopener\">What is Cost Accounting?<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/introduction-to-cost-accounting\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/introduction-to-cost-accounting\/\" target=\"_blank\" rel=\"noreferrer noopener\">Meaning of Cost.<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/introduction-to-cost-accounting\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/introduction-to-cost-accounting\/\" target=\"_blank\" rel=\"noreferrer noopener\">Meaning of Costing<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/introduction-to-cost-accounting\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/introduction-to-cost-accounting\/\" target=\"_blank\" rel=\"noreferrer noopener\">Meaning of Cost Accounting<\/a><\/li>\n<\/ul>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":13956,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[7,1],"tags":[4438],"class_list":["post-13939","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-degree-college","category-misc","tag-piece-rate-system"],"_links":{"self":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/13939","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/comments?post=13939"}],"version-history":[{"count":2,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/13939\/revisions"}],"predecessor-version":[{"id":35921,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/13939\/revisions\/35921"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media\/13956"}],"wp:attachment":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media?parent=13939"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/categories?post=13939"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/tags?post=13939"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}