CIMA Fundamentals Of Management Accounting (BA2) Practice Exam

What is a piecework system?

A budget for production A scheme where an employee is paid per unit of output An estimate of labour efficiency A standard cost card

Correct Answer:

A scheme where an employee is paid per unit of output

Explanation:

A piecework system is a wage arrangement where pay is tied directly to output, with a set rate paid for each unit produced. The more units a worker makes, the more they earn, so earnings rise with volume. This links labour costs to production and can boost productivity, though it can also risk quality if quantity is prioritized over accuracy. It’s different from a production budget (which plans expected output and costs), an estimate of labour efficiency (which measures how efficiently work is done, not how it’s paid), or a standard cost card (which lists standard costs for costing purposes, not wages).

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