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Question 1: Truth Inducers Corporation has implemented the following bonus scheme for its regional sales managers. The mangers are paid 6% of the sales forecast and a 3% incremental pay for every $ of actual sales in excess of forecast whenever actual sales exceed forecast. However, if actual sales fall below the forecast, the total payment is 6% of the sales forecast minus 9% of the amount by which sales fall below forecast. Under the above scheme, a sales manager, who has private knowledge of expected sales of $10,000, can expect to make a bonus of
Option1 : $540 when she makes a forecast of $9,000
Option2 : $570 when she makes a forecast of $9,000
Option3 : $660 when she makes a forecast of $11,000
Option4 : $600 when she makes a forecast of $11,000
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