Caythorpe Co was formed five years ago when the government of Jayland transferred the operation of its state$-$owned telecommunications network to private ownership.

The senior management of Caythorpe Co are under pressure to increase profits and are considering their approach to budget setting in two divisions of the company.

Administrative Research Division

The division is mainly staffed by people who worked for the company when it was under state ownership. Each of its research activities are treated as separate projects. Costs continue to increase and forecasts are often inaccurate. Many of the senior management of Caythorpe Co are unsure what the division actually does.

Television Division

This division sells television channels which are delivered to customers via its network of fibre optic cables. Its budgeted statement of profit or loss for $20$X$7$ is given below:

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