Calculations for perpetual versus periodic inventory Emerald Ltd uses a perpetual inventory control system. The following data are available:

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Inventory on hand at the beginning of the year (100 000 units at $5 cost each) 500 000 Purchases for the year (850 000 units at $5 cost each) 4 250 000 Sales for the year (865 000 units at $11 price each) 9 515 000 Inventory on hand at end of the year (70 000 units at $5 cost each) 350 000 1 Calculate the COGS expense for the year, based on the company’s perpetual inventory system.

2 If the company had been using the periodic inventory method, what would the COGS expense for the year have been?

3 A perpetual system costs money to operate. Is it likely to be worthwhile for Emerald Ltd?