Vacation Cost

LarryC

I'm trying to find out what the added labor cost is when someone goes on vacation. I know it's not dollar for dollar. In other words, when someone goes on vacation for the week, another employee doesn't put in 40 hours of OT to make up for that person being gone. Our Manufacturing Manager budgets an extra 2% of labor to cover for vacation time and backs up his logic with some good reasoning. What he's saying is that when a $10 per hour person goes on vacation, it's actually costing you $10.20 per hour. However, I'm still interested in how the rest of you figure your vacation cost. I already know how it's expensed, so we don't need to go there.

Thanks for your input.

Don D

I'm adding five temps today specifically as fillins for vacationing employees. Temps cost us $12 an hour and these five will undoubtedly work the rest of the year. right now everybody, including temps is working roughly 67 hours per week. overtime obviously raises the temp cost to $18 and Sunday work costs us $24 per hour. I don't know if this provides a partial answer for you or not, but it's an example of real cost, hard cash that would not be spent were it not for vacations. I don't understand your guy's 2% factoring.

System

My math came up a little differently. If an employee earning $10 per hour goes on vacation and is replaced with a temp at $10 per hour, the added cost for the year is 40 cents per hour. That's 4% per employee taking vacation.

Don D

It looks to me as if the added cost is the total ten bucks per hour. Every nickel of temp cost is 'added cost'. How you figure 40 cents?

System

I'm spreading the cost out over a year. I took $10 and multiplied it by 80 hours. That's $800 extra dollars per year to budget. Then to get the percentage, I divided 800 by 2080. That's .3846 - rounded = 4%.