Reference no: EM132529473

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