The June 1997 issue of Management Accounting gave the following rule for predict- ing your current salary if you are a managerial accountant. Take $31,865. Next add $20,811 if you are top management, add $3,604 if you are senior management, or subtract $11,419 if you are entry management. Then add $1,105 for every year you have been a managerial accountant. Add $7,600 if you have a master’s degree or subtract $12,467 if you have no college degree. Add $11,527 if you have a profes- sional certification. Finally, add $8,667 if you are male.
a. How do you think the journal derived this method of estimating an accountant’s current salary? Be specific.
b. How could a managerial accountant use this information to determine whether he or she is significantly underpaid? Be as specific as possible.