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The Concept

In manufacturing concerns, paying workers on the basis of actual hours worked is considered as a fair method. This reward system is also argued as suitable to achieve efficiency being rewarding efficient workers at a higher rate for working extra hours than the standard hours allowed.  However, there is another widely used reward system commonly known as “Taylor’s Differential Piece rate Plan”. In this system, a worker is paid on the basis of production and not the time taken to produce the work. Piece rate system is favored due to the fact that it allows the efficiency of workers to increase. But, the opponents of this system argued that this system does not differentiate a less efficient worker from a more efficient worker.


1) List down the circumstances under which piece rate system can increase workers’ efficiency.

2)   How Tylor’s piece rate plan can solve the draw-back of piece rate system? Support your answer with any suitable example.



  1. Be precise and to the point.
  2. Do not copy/paste from another student or any other source.
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Replies to This Discussion

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Answer of Question no1

The amount of work can be precisely measured and standardised.

The work is of repetitive nature.

If the productivity is closely related to skill and efforts the unit cost can be easily determined and controlled.

If it is possible to fix a fair and acceptable piece rate where time cards are maintained for ensuring, regularity and punctuality of workers and uninterrupted flow of production.

If there is no fear of unwarranted rate cutting by the management and the management realizes the significance of the system.

mgt402 cost and management accounting GDB solutions fall 2020 || whatsapp for grand quiz solutions

MGT402 GDB 1 Solution Deadline Dec 14, 2020

Mgt402 Gdb idea sol
1.Production goes up when wages are paid according to piece rate system. Workers will feel encouraged to increase output because their wages will also increase. ... Efficient workers will try to exert maximum in order to raise their production and hence wages. . It can be implemented under the circumstances to know exact cost accountable for , to increase workers efficiency ,To Complete the quantity order within time frame, for better utilization of equipments /machines ,To know difference of efficient and ineffiecent workers ,To reduce extra supervision cost, for better planning and control .
2.Taylor’s Differential Piece-Rate System was introduced by F.W. Taylor, who believed that the workers should be paid on the basis of their degree of efficiencies. Under this method, with the help of Time and Motion Study, the standard time for the completion of a job is fixed on the basis of which the performance of the workers is evaluated.Taylor’s differential piece-rate system posits that the worker who exceeds the standard output within the stipulated time must be paid a high rate for high production. On the other hand, the worker is paid a low rate if he fails to reach the level of output within the standard time. Thus, there are two piece-rates, one who reach the standard output or exceeds it, is paid 120 percent of the piece rate. While the one who fails to reach the standard level of output, is paid 80 percent of the piece-rate. The minimum wages of the worker are not guaranteed.


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