Which "average" would be best to use in the following situation?
The accountant for a small company is asked to determine the average salary of its employees. The company is owned by two brothers who each make over $300,000 per year. The accountant makes $80,000 per year. The salaries of the other eighteen employees of the company vary by years of experience and job title, but all fall in the $25,000 - $45,000 range.
my answer this would be a mean , not a mode or median.
The mean would not reflect the salaries of the 18 employees -- but would be way above their salaries.
In this case I think the median would give a more accurate picture of the average salary of the company's employees.
I guess to look at it would fall into the salary range. i was looking at average is how i got my answer thanks!
You're welcome.
(2 * 300,000) + 80,000 + (18 * 35,000) / 21 = 62,380.95
That is almost $20,000 higher than the highest paid employee.
You're correct! In this situation, the most appropriate average to use would be the mean.
The mean, also known as the arithmetic average, is calculated by summing up all the salaries and dividing it by the number of employees. In this case, you would add up the salaries of all the employees (including the two brothers, the accountant, and the other eighteen employees) and divide it by the total number of employees.
Using the mean in this scenario would give you a fair representation of the average salary across all employees, taking into account both the higher salaries of the owners and the varying salaries of the other employees.
On the other hand, the mode would not be a suitable average because there is no salary that occurs more frequently than others. Similarly, the median might not accurately represent the average as it would be heavily influenced by the salaries of the owners and the accountant, which are considerably higher than the salaries of the other employees.
So, in summary, using the mean to determine the average salary in this situation would provide a fair representation of the salary distribution across all employees.