$9-40$ Absorption, variable, and throughput costing. $($LO $3,4)$ EnRG Inc. produces trail mix packaged for sale in convenience stores across Canada. At the beginning of April, EnRG has no inventory of trail mix. Demand for the next three months is expected to remain constant at $50,000$ bags per month. EnRG plans to produce $50,000$ bags in April. However, many of the employees take vacation in June, so EnRG plans to produce $70,000$ bags in May and only $30,000$ bags in June.

Costs for the three months are expected to remain unchanged. The costs and revenues for April, May, and June are expected to be

Sales revenue

Direct material cost

Direct manufacturing labour cost

Variable manufacturing overhead cost

Variable selling cost

Fixed manufacturing overhead cost

Fixed administrative costs

$$6\mathrm{.}00$ per bag

$$0\mathrm{.}80$ per bag

$$0\mathrm{.}45$ per bag

$$0\mathrm{.}30$ per bag

$$0\mathrm{.}15$ per bag

$$105,000$ per month

$$35,000$ per month

Suppose the actual costs, market demand, and levels of production for April, May, and June are as expected.

Required

Compute operating income for April, May, and June under variable costing.

Compute operating income for April, May, and June under absorption costing. Assume that the denominator level for each month is that month's expected level of output.

Compute operating income for April, May, and June under throughput costing.

Discuss the benefits and problems associated with using throughput costing.

Please answer all questions.