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  3. 1. meldo division is part of a vertically integrat

1. Meldo division is part of a vertically integrated group where all divisions sell externally...

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Accounting

1. Meldo division is part of a vertically integrated group where all divisions sell externally and transfer goods to other divisions within the group. Meldo Division's management performance is measured using controllable profit before tax as the performance measurement criterion.

a) Show the cost and revenue elements, which should be included in the calculation of controllable divisional profit before tax.

b) Discuss ways in which the degree of autonomy allowed to Meldo Division may affect the absolute value of controllable profit reported.

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