This may be a stupid question..calorie intake

You can eat them back or not if you want, if you don't eat them it will just add to your cut.
YOU NEED to make sure you are logging them accurately with a Heart Rate Monitor, not some crap average estimator.

Depends on how that 1200 was calculated, but in most cases you'll want to eat them back.

I don't eat back my workout calories, I feel like it defeats the purpose...atleast for me.

You can eat them back or not if you want, if you don't eat them it will just add to your cut.
YOU NEED to make sure you are logging them accurately with a Heart Rate Monitor, not some crap average estimator.

A HRM will be more accurate, but I lost 25 lbs on this site using it's exercise calculator and eating back my calories, and many others have had even greater success without using a HRM. So you don't need a HRM if you don't have one, but they can be helpful. These days I wear a BodyMedia Fit, which has been a very helpful tool for me.

I eat back some of them but not all.

I have just been using myfitness pal for the calories used for exercise. Isnt this an accurate way?

thats what I thought =/

I just joined MyFitnessPal so I am not sure how accurate their calorie counts are, but they have to be pretty generalized. You have to remember that where exercise is concerned, how much you weigh, the amount of lean muscle versus fat you have and the heart rate you maintain while you exercise are all factors in fat metabolism (calorie burn). Your body is going to use what is easiest for it to get to first (e.g. the carbohydrates you have eaten today).

If I am set at 1200 for weight loss but I an burning from 385-600 calories working out. Do I still just consume those 1200 or do I have to consume the calories I burned? Make sense?

Might I suggest eating back what you burn in exercise at least to get you where you consume your BMR at a minimum. A lot of folks will toss around 1,200 calories as a floor before hitting "starvation mode" and altering metabolism, but from what I've been able to put together from the various discussions, etc. is that 1,200 is a little too simplistic and doesn't take into account specifics about the individual. BMR tends to be tied to the individual issues like current weight, height, etc. There's PLENTY of technical explanations out there for lots of things and, as you get more and more into this, your knowledge base will grow, but probably a good simple rule of thumb is:

Keep calories in lower than calories out and keep calories in at least at the BMR level, along with sensible exercise, and you'll see/feel results.

One REALLY BIG CAVEAT ... be careful overestimating your workout calories. A lot of the stuff that MFP shows as default calories burned for exercise tend to be high, so if you are eating back calories, you could easily be going over on your calorie intake taking the exercise calories on MFP at face value. Whenever possible, use a heart rate monitor (HRM) to get more individualistic/accurate assessment of your true calorie burn. If you don't have an HRM, the next best thing to do is enter you info on the gym machines and use the calorie readout there as opposed to the MFP exercise database numbers.

MFP's goal of 1200 is already putting you at a deficit to reach your goal. If you exercise and don't eat them back, you are not going to be getting enough fuel for your body. You want to make sure at the end you NET around your goal so that you are keeping up your metabolism, and still losing. You want to be able to maintain the wightloss, slow and steady wins the race. As people have mentioned though, try to be as accurate as possible on your diary, exercise, etc.