Reference no: EM132610040

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):

Question 1: Using the Direct Method allocate the service centre costs

Question 2: Using the Step Method allocate the service centre costs

Question 3: Using the Reciprocal Method allocate service centre costs

Question 4: Briefly discuss the implications of your results and why such an analysis is important