General Inquiries

Holiday/Vacation Time for Job Costed Employees - Above or Below the Line?

  • 1.  Holiday/Vacation Time for Job Costed Employees - Above or Below the Line?

    Posted 11-07-2018 10:14
    ​​We are looking to see where most people track vacation and holiday pay for field and shop employees. On a regular basis, these employees charge their time to jobs and thus are included in gross margin.  When they take vacation and holiday and receive pay, those costs are charged below the line to an overhead account.  This causes fluctuations in overhead costs on a monthly basis and so we are looking at moving this above the line.

    I am curious to know how most companies are charging these expenses.  Are you charging to jobs through a percentage accrual, charging to an account that falls above the line but not to a specific job or is this being charged to an overhead account?

    Appreciate any feedback!

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    Andi Kirkpatrick CPA
    Chief Financial Officer
    Trade Construction Company
    Zachary LA
    (225) 654-7741
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  • 2.  RE: Holiday/Vacation Time for Job Costed Employees - Above or Below the Line?

    Posted 11-07-2018 13:30
    I do not work directly for a contractor, but my advice to my clients is that vacation and holiday pay should considered indirect labor.  The cost of paying your direct employees vacation and holiday pay should be built into the overhead rate that you charge to your jobs as an above the line deduction throughout the year.  This allows you to spread the cost of their vacation and holiday time across all jobs they work on, not just the current job when they take vacation.

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    Dennis J. Shindle, Jr. CPA, CCIFP
    Manager
    Rotz & Stonesifer, P.C.
    Chambersburg PA
    (717) 264-5961
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  • 3.  RE: Holiday/Vacation Time for Job Costed Employees - Above or Below the Line?

    Posted 11-08-2018 08:05

    We charge these costs to overhead.

     

     

    Robert McManus

    Chief Financial Officer

    Direct: 404.965.9349 

    Main: 404.361.5154 | Fax: 404.965.9355

    PO Box 45717 | Atlanta, GA 30320

    www.msrs.com

                

     

     

     

     






  • 4.  RE: Holiday/Vacation Time for Job Costed Employees - Above or Below the Line?

    Posted 11-07-2018 15:01
    I recently reviewed how our job cost system is accounting for vacation.  For direct labor, we charge their vacation costs to the job.  Many of our jobs are in excess of 3 months in length so a number of jobs will get charged with the vacation cost.  As for PM's and Estimators, we decided to charge their time to G&AS expenses as they work less than full time on a specific project.  This allows us to account for this overhead for our professional staff.  Superintendents vacation is charged to the job

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    Steven Schertz CPA
    CFO
    Henegan Construction Company
    New York NY
    (212) 947-6441
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  • 5.  RE: Holiday/Vacation Time for Job Costed Employees - Above or Below the Line?

    Posted 11-08-2018 07:50
    Hi,

    I'm with Steve on this one. For PM/Estimating who are more likely to not only split their time between active projects and pre-construction and closeout tasks, treat the PTO as OH expense. For field folk assigned to a specific project (generally for the duration) we code the PTO to that project.

    It's always an interesting conversation when a client asks 'am I paying for his vacation?'  'You carried 20 weeks of Supervision, and he was gone in April and again in August'

    Joe

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    Joe Burkett CCIFP
    CFO
    Cafco Construction Management LLC
    Boston MA
    (617) 426-7600
    jburkett@cafcoconstruction.comJoseph
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  • 6.  RE: Holiday/Vacation Time for Job Costed Employees - Above or Below the Line?

    Posted 11-08-2018 07:13
    Andi,
    We charge PTO/holiday to jobs through burden (as a fixed hourly amt), with the other side hitting an accrual account. When the field employees uses PTO it is debited against the PTO accrual.
    We accrue office PTO/Holiday time in a similar manner, just not through job cost.

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    Scott Bishop CPA
    C F O
    Buist Electric, Inc.
    Byron Center MI
    (616) 878-3315
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  • 7.  RE: Holiday/Vacation Time for Job Costed Employees - Above or Below the Line?

    Posted 11-08-2018 08:35

     

    Andi,

     

    We do a vacation accrual as a part of labor burden, percent of gross, that is charged when field vacation is taken.  The costs are incurred across all jobs but no one specific job gets a hit when vacation is taken.  The vacation time is charged back against the accrual account.

     

    Luther

    Luther Burrell

    VP of Administration and IT

    Ivey Mechanical Company

    662-289-3646 x2003 phone

    662-289-3713 fax

     

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  • 8.  RE: Holiday/Vacation Time for Job Costed Employees - Above or Below the Line?

    Posted 11-08-2018 10:17
    We charge vacation and holiday as another labor burden item along with all other labor related costs. The combo of all those costs becomes a percentage of labor cost. As labor cost is posted, this burden percentage follows and is applied wherever the labor cost is posted to - job cost, supervisory, admin, management, et al.

    Additional details - All labor burden costs are posted in a section of OH Expenses. If the labor burden % being used for burden (as described above) is too light, there will be a cost left over in OH Expenses after relieving to the labor areas. If the burden % is too heavy, the credit stays in OH Expense. We figure the percentage at budget time and it stays through the year unless there are big changes.

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    Gary Garber
    President
    Garber Electrical Contractors
    Englewood OH
    ggarber@garberelectric.com
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  • 9.  RE: Holiday/Vacation Time for Job Costed Employees - Above or Below the Line?

    Posted 11-09-2018 08:49
    Another vote for Team Overhead.  We factor vacation and holiday time into labor burden.  Therefore it is added to Job Cost as part of payroll.  When actual vacation/holiday time hits, this then gets posted to Overhead.

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    Dan Harris
    Controller
    Tandem Construction
    Sarasota FL
    (941) 954-1599
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