Jupiter PetCare Ltd has two factories on the one site at their Albury Wodonga Australasian headquarters where they manufacture 'Maaate' and 'Chummy' wet dog food brands. The company's production is highly automated and for management accounting reporting purposes manufacturing costs are aggregated into two cost centres for each product. Jupiter PetCare Ltd operates two separate production service departments, Maintenance and Robotics, which support the production lines in the two product departments. The company has decided that the most appropriate basis to allocate Maintenance costs is the number of maintenance jobs each cost centre incurs. The allocation of the Robotics department costs is based on the number of computer driven automated and robotic machines in each cost centre.

Costs for the different cost centres during the month of May 2020 were as follows:

Maaate Prodn.

$910,000

Chummy Prodn.

$175,000

Maintenance

$472,000

Robotics

$675,000

Department

No. of Maintenance Jobs

No. of Robotic Machines

Maaate Prodn.

200

28

Chummy Prodn.

80

44

Maintenance

-

8

Robotics

40

-

Answer the following questions using spreadsheet models(example formats are available in the Assignment Resources folder on the subject Interact site):

1. Using the Direct Method allocate the service centre costs (5 marks)
2. Using the Step Method allocate the service centre costs (7 marks)
3. Using the Reciprocal Method allocate service centre costs (15 marks)
4. Briefly discuss the implications of your results and why such an analysis is important (3 marks)

Important Note:when calculating the Reciprocal Method of overhead allocation students may use either the simultaneous equation method or the 'solver' function in Excel to resolve this problem. Please show full workings.