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(a) ‘Because of the possibility of goal incongru¬ ence, an optimal plan can only be achieved if divisional budgets are constructed by a central planning department, but this means that divisional independence is a pseudo-indepen¬ dence.’

Discuss the problems of establishing divi¬ sional budgets in the light of this quotation.

(9 marks)

(b) ‘Head Office’ will require a division to submit regular reports of its performance.

Describe, discuss and compare three measures of divisional operating performance that might feature in such reports. (8 marks) ACCA Level 2 Management Accounting