Chapter 15, Problem 57SE

Fortune magazine publishes an annual list of the 100 best companies to work for. The data in the file named FortuneBest shows a portion of the data for a random sample of 30 of the companies that made the top 100 list for 2012 (Fortune, February 6, 2012). The column labeled Rank shows the rank of the company in the Fortune 100 list; the column labeled Size indicates whether the company is a small, midsize, or large company; the column labeled Salaried (S1000s) shows the average annual salary for salaried employees rounded to the nearest $1000; and the column labeled Hourly ($1000s) shows the average annual salary for hourly employees rounded to the nearest $1000. Fortune defines large companies as having more than 10,000 employees, midsize companies as having between 2500 and 10,000 employees, and small companies as having fewer than 2500 employees.

Rank	Company	Size	Salaried ($1000s)	Hourly ($1000s)
4	Wegmans Food Markets	Large	56	29
6	NetApp	Midsize	1 43	76
7	Camden Property Trust	Small	71	37
8	Recreational Equipment (REI)	Large	103	28
10	Quicken Loans	Midsize	78	54
11	Zappos.com	Midsize	48	25
12	Mercedes-Benz USA	Small	118	50
20	USAA	Large	96	47
22	The Container Store	Midsize	71	45
25	Ultimate Software	Small	166	56
37	Plante Moran	Small	73	45
42	Baptist Health South Florida	Large	126	80
50	World wide Technology	Small	129	31
53	Methodist Hospital	Large	100	83
58	Perkins Coie	Small	189	63
60	American Express	Large	114	35
64	TDIndustries	Small	93	47
66	QuikTrip	Large	69	44
72	EOG Resources	Small	189	81
75	FactSet Research Systems	Small	103	51
80	Stryker	Large	71	43
81	SRC	Small	84	33
84	Booz Allen Hamilton	Large	105	77
91	CarMax	Large	57	34
93	GoDaddy.com	Midsize	105	71
94	KPMG	Large	79	59
95	Navy Federal Credit Union	Midsize	77	39
97	Schweitzer Engineering Labs	Small	99	28
99	Darden Restaurants	Large	57	24
100	Intercontinental Hotels Group	Large	63	26

1. a. Use these data to develop an estimated regression equation that could be used to predict the average annual salary for salaried employees given the average annual salary for hourly employees.
2. b. Use α = .05 to test for overall significance.
3. c. To incorporate the effect of size, a categorical variable with three levels, we used two dummy variables: Size-Midsize and Size-Small. The value of Size-Midsize = 1 if the company is a midsize company and 0 otherwise. And, the value of Size-Small = 1 if the company is a small company and 0 otherwise. Develop an estimated regression equation that could be used to predict the average annual salary for salaried employees given the average annual salary for hourly employees and the size of the company.
4. d. For the estimated regression equation developed in part (c), use the t test to determine the significance of the independent variables. Use α = .05.
5. e. Based upon your findings in part (d), develop an estimated regression equation that can be used to predict the average annual salary for salaried employees given the average annual salary for hourly employees and the size of the company.