The manager of a trading division has complete autonomy regarding the purchase and use of non-current assets.

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The manager of a trading division has complete autonomy regarding the purchase and use of non-current assets. The division operates its own credit control policy in respect of customers but the group operates a central purchasing function through which the division places all orders with suppliers and invoices are paid by head office.

Inventories of goods for sale are kept in central stores, from which local divisions call off requirements for local sales on a monthly basis into a local inventory.

Divisional performance is assessed on the basis of controllable Residual Income. The company requires a rate of return of ' $R$ '.

Using the following symbols:

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Which one of the following formulae calculates the division's controllable residual income?

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