INDIVIDUAL ACTIVITY

Activity No. 5: COMPREHENSIVE PROBLEMS

Instruction: Solve the following problems in a clean sheet of paper and kindly include your
solution(s).

Problem #1

The Norman Company predicts that 8,000 units of material will be used during the year.
The materials are expected to cost P4.00 per unit. It is anticipated that it will cost P40.00 to
place each order. The annual carrying cost is P25.00 per unit.

Determine:

a. The most economical order quantity.

b. The total cost of ordering and carrying at the EOQ point.

Problem #2

The following information is to be used in costing inventory on August 31.

August 1 Beginning balance 1,600 units at P6.00

5 Purchased 400 units at P7.00
9 Purchased 400 units at P8.00
16 Issued 800 units
24 Purchased 600 units at P9.00
27 Issued 1,000 units

Required: The cost of materials used and the cost assigned to the August 31 inventory by each
of these perpetual inventory costing methods.

1. First-in, first-out
2. Average
3. Kindly provide your solution(s).