Labour Piecework Payment Formula

Labour Piecework Payment Formula

Labour Piecework Payment formula has been explained with examples.  Payment is simply calculated by multiplying the unit produced with labour rate.

Labour Piecework Formula = Unit Produced x Rate per Unit

Labour Piecework Payment Formula Example

Total units produced = 8000

Unit Labour Rate      = $ 8

Calculate labour payment using piecework formula?

Solution

Labour payment = Unit Produced x Rate per Unit

= 8000 x 8

= 64,000 $

Piecework is a labour payment system, in this system labour are paid on the bases of output (unit produced).

 Reasons for using Piecework System

Primary reason for using this method is to control the labour cost and improve efficiency of labour. Under this system payment is made for productivity. Thus piecework method is an effective tool to control or improve the efficiency of employees.

Advantages of Piecework System

Advantages of piecework payment system include performance bases payment system, improves efficiency, easy to understand and apply, and support the variable cost concept of labour cost.

Disadvantage of Piecework System

Total output based payment is not practical in business, create psychological pressure and stress environment for the employees, high volume race would have negative impact on quality.

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Labour Piecework Payment Formula
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