=+(ii) Depreciation includes an allocation of HO and central R & D facilities' depreciation, the allocation being equal to 1 % of net sales per division.

(iii) R & D is conducted centrally and costs have been allocated to divisions on the basis of notional benefits estimated by the Research Director. Inquiry ascertains that 40% of all R & D expenditure is on basic research, while the remainder is development work contracted for by the 3 divisions in the cost proportions of A (25%), B (50%) and C (25%).