Alsen Company is in the process of preparing its budget. As part of the process, the company has prepared sales estimates and estimated the probability associated with each sales estimate. Which one of the following techniques should be used by Alsen to determine sales for budgeting purposes?

Answer (C) is correct. The expected value of an action is found by multiplying the probability of each possible outcome by its payoff and summing the products. It represents the long-term average payoff for repeated trials. If estimates of sales and probabilities are known, expected value analysis can be used to determine budgeted sales.