B&B maintains its a tire industry inventory using the perpetual inventory method. The inventory records for May follow:

Using the weighted-average cost method, how much will B&B report as gross profit for May?

Beginning inventory	20 units @ $105 each
May 12 purchase	30 units @ $110 each
May 20 sale	40 units @ $195 each
May 25 purchase	15 units @ $115 each

1. $4,995
2. $3,500
3. $3,480
4. $3,325