This chapter is about inventory costing and capacity analysis. Specifically, it discusses alternative inventory costing methods (variable, absorption and throughput), alternative income statement format presentations (variable and absorption costing operating income) and alternative denominator-level capacity concepts (theoretical, practical and normal capacities). Let's pretend that you are introducing these concepts to a group of cost accounting students. In three sentences or less, explain why this chapter is important and how to balance management incentives with full and fair inventory disclosure when trying to manage inventory costs. (3 sentence maximum.)

Managers use various methods in determining how costs behave. What are the quantitative methods of cost function estimation and why is determining cost behaviors useful to managers in making decisions? (2 sentence maximum)