Razzamatazz Ltd uses a perpetual inventory control system. The following data are available:

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 Razzamatazz?

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Inventory on hand at the beginning of the year (100 000 units at $5 cost each) Purchases for the year (850 000 units at $5 cost each) Sales for the year (865 000 units at $11 price each) Inventory on hand at end of the year (70 000 units at $5 cost each) $ 500 000 4 250 000 9 515 000 350 000