Amazon must carry inventory to meet demand from its customers. If the item is not in inventory the customer may go elsewhere to source the item whether it is a raw material or final product. Amazon's finance managers are concerned about carrying too much inventory as they borrow money to finance the inventory on hand which can prove to be expensive. Management therefore spends a considerable amount of time evaluating: a. the demand for its products over the next period.
b. the costs associated with holding a sufficient amount of inventory-both financing, storage, transportation and other costs the costs associated with not having enough inventory to satisfy customer demand
c. the EOQ model or economic ordering quality model to determine the optimal amount of inventory to maintain.
d. all of the above.
e. none of the above.

Exercise 6-2 variable costing income statement; explanation of difference in net operating income [lo6-2] ida sidha karya company is a family-owned company located on the island of bali in indonesia. the company produces a handcrafted balinese musical instrument called a gamelan that is similar to a xylophone. the gamelans are sold for $970. selected data for the company’s operations last year follow: units in beginning inventory 0 units produced 200 units sold 180 units in ending inventory 20 variable costs per unit: direct materials $ 130 direct labor $ 300 variable manufacturing overhead $ 30 variable selling and administrative $ 15 fixed costs: fixed manufacturing overhead $ 63,000 fixed selling and administrative $ 25,000 the absorption costing income statement prepared by the company’s accountant for last year appears below: sales $ 174,600 cost of goods sold 139,500 gross margin 35,100 selling and administrative expense 27,700 net operating income $ 7,400 required: 1. under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? 2. prepare an income statement for last year using variable costing.