1.	Prepare income statements for entertain Me in January, February, and March 2020 under throughput costing.
2.	Contrast the results in requirement 1 with the operating income results under variable costing and absorption costing.
3.	Give one motivation for Entertain Me to adopt throughput costing.

Data table

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	January	February	March
Unit data:
Beginning inventory	0	150	150
Production	1,500	1,400	1,520
Sales	1,350	1,400	1,530
Variable costs:
Manufacturing cost per unit produced	$1,000	$1,000	$1,000
Operating (marketing) cost per unit sold	$800	$800	$800
Fixed costs:
Manufacturing costs	$525,000	$525,000	$525,000
Operating (marketing) costs	$130,000	$130,000	$130,000

The variable manufacturing costs per unit of EntertainMe Corporation are as follows Data table

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	January	February	March
Direct material cost per unit	$525	$525	$525
Direct manufacturing labor cost per unit	200	200	200
Manufacturing overhead cost per unit	275	275	275
	$1,000	$1,000	$1,000

Entertainme prepared the following income statements under variable costing and absorption costing.

January 2020		February 2020		March 2020
Revenues				$4,455,000		$4,620,000		$5,049,000
Variable costs:
	Beginning inventory		$0		$150,000		$150,000
	Variable manufacturing costs		1,500,000		1,400,000		1,520,000
	Cost of goods available for sale		1,500,000		1,550,000		1,670,000
	Less:	Ending inventory	(150,000)		(150,000)		(140,000)
	Variable cost of goods sold		1,350,000		1,400,000		1,530,000
	Variable operating costs		1,080,000		1,120,000		1,224,000
	Total variable costs			2,430,000		2,520,000		2,754,000
Contribution margin				2,025,000		2,100,000		2,295,000

Fixed costs:
	Fixed manufacturing costs		525,000		525,000		525,000
	Fixed operating costs		130,000		130,000		130,000
	Total fixed costs			655,000		655,000		655,000
Operating income				$1,370,000		$1,445,000		$1,640,000

Absorption costing income statement

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			January 2020			February 2020			March 2020
Revenues					$4,455,000			$4,620,000			$5,049,000
Cost of goods sold:
	Beginning inventory		$0			$202,500			$202,500
	Variable manufacturing costs		1,500,000			1,400,000			1,520,000
	Allocated fixed manufacturing costs		525,000			490,000			532,000
	Cost of goods available for sale		2,025,000			2,092,500			2,254,500
	Less:	Ending inventory	(202,500)			(202,500)			(189,000)
	Adj. for production-volume variance		0			35,000	U		(7,000)	F
	Cost of goods sold				1,822,500			1,925,000			2,058,500
Gross margin					2,632,500			2,695,000			2,990,500

Operating costs:
	Variable operating costs		1,080,000			1,120,000			1,224,000
	Fixed operating costs		130,000			130,000			130,000
	Total operating costs				1,210,000			1,250,000			1,354,000
Operating income					$1,422,500			$1,445,000			$1,636,500