Stonewall Industries, an 1,800 employee firm, is faced with a serious and growing absenteeism problem. Last year, total employee hours lost to absenteeism came to 119,808. Employees are paid wages and receive benefits for the hours they are absent.

Level	Average % of total employee absenteeism	Average Hourly Wage	Cost of benefits paid
Technical	65%	$25.15	38% of annual cost of wages
Clerical	25%	$19.80
Management	10%	$37.60

Employees work 8 hours a day (40 hours per week) for 245 days out of the year.

To manage absentee related issues and problems when employees do not show up to work, 45 supervisors spend, on average, 40 minutes per day, for the 245 days they work per year addressing these matters. The average salary of this group is $29.35 per hour.

Additionally, the company estimates it pays an additional $729,500 each year in compensation for temporary employees to cover the work of those that are absent.

The HR Director at Stonewall assigns you the task to estimate the total impact and cost of employee absenteeism so that management can better understand the dimensions of the problem.

Work with your group to (1) describe how to estimate the impact / cost, and (2) provide an estimate based off of the numbers provided above. Explain which formula are you using.

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