Larry produced 40 pressed inner fenders out of sheet metal per hour and got paid $24 per hour ($0.60 × 40).Michelle only produced 30 inner fenders per hour and got paid $18.00 ($0.60 × 30).Larry and Michelle are working under a ______ system.
A) commission
B) merit pay
C) straight piece-rate
D) differential piece-rate

Question

Quizplus · Accepted Answer

The workers are being paid based on the number of units produced, which is a straight piece-rate system. They receive a fixed amount for each unit produced, regardless of the time it takes to produce it. The pay rate of $0.60 per unit is consistent for both Larry and Michelle. Commission-based pay involves a percentage of sales, while merit pay involves an increase in pay based on performance evaluations. Differential piece-rate involves receiving different rates of pay based on different levels of production.

Larry Produced 40 Pressed Inner Fenders Out of Sheet Metal