=+(vi) Corporation tax appears to have been fairly allocated. (vii) Divisional capital includes an allocation of centrally

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=+(vi) Corporation tax appears to have been fairly allocated.

(vii) Divisional capital includes an allocation of centrally controlled capi tal totalling f3 000 000, wh ich for historical reasons has been allocated to A (60%), B (20%)

and C (20%).

(viii) Corporation cost of capital is assessed at 10%, post-tax.

(b) Outline the arguments for and against the allocation of common costs and give your opinion on whether such allocations are useful.

(c) What theoretical and practical advantages does residual inco me offer as opposed to rate of return on investment?

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Accounting For Management Control

ISBN: 9780412374807

2nd Edition

Authors: David Otley And Kenneth Merchant Clive Emmanuel

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