Assume that MacHine management is considering using throughput costing for management decision making. (Refer to Exercise 15.36)
Exercise 15.36
MacHine Company produces a part used in the manufacture of farm machinery. The following information pertains to the past three years of operations. MacHine Company uses FIFO costing.

REQUIRED
A. Calculate the value of ending inventory and net income before taxes for each year under throughput costing. Assume direct materials are $20 per unit.
B. Explain the difference in net income before taxes under the variable costing and throughput costing approaches for each year.

2010 ,0005,500 6,000 16,500 5,5006,000 5,000 16,500 2011 2012 Total Units sold Units produced Fixed production costs $200,000 $200,000 $200,000 $ 55 $55 $ 55 $ 175 $175 $175 Fixed selling and administrative expenses 50,000 $ 50,000 $ 50,000 Selling price per unit