A fire destroyed a warehouse of the Goren Group, Inc., on May 4, 2021. Accounting records on that date indicated the following:

Merchandise inventory, January 1, 2021 $ 2,060,000

Purchases to date 5,960,000

Freight-in 560,000

Sales to date 9,800,000

The gross profit ratio has averaged 25% of sales for the past four years. Required: Use the gross profit method to estimate the cost of the inventory destroyed in the fire.