Straight Piece Rate Pay
Some companies, especially manufacturers, pay workers according to how much they produce.
Zoho Company pays Mary for the number of toys she produces in a week.
This gives Mary an incentive to make more money by producing more toy's.
Mary receives $1 per toy, less any defective units.
The following formula determines Mary' gross pay:
Gross pay = Number of units produced x Rate per unit
Companies may also pay a guaranteed hourly wage and use a piece rate as a bonus.
However, Zoho uses straight piece rate as wages for some of its employees.
Example: During the last week of March, Mary produced 600 toys. Using the above formula, Zoho Company paid Mary $600.
Differential Pay Schedule
Some of Zoho's employees can earn more than the $1 straight piece rate for every toy they produce.
Zoho Company has set up a differential pay schedule for these employees.
The company determines the rate these employees make by the amount of units the employees produce at different levels
of production.
Example: Zoho Company pays Mike on the basis of the following schedule:
Last week Mike produced 300 toys. What is Mike' gross pay?
Answer: (50 x $.50) +(100 x $.62)+(50 x $.75) + (100 x $1.25) = $249.50
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Date of last modification: March 11, 2019