On November 21, 2016, a flood at Hodge Company's warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $8,200. The following information was available from Hodge's accounting records for Product Tex: Inventory at November 1, 2016 $117,000 Purchases from November 1, 2016, to date of flood 131,000 Net sales from November 1, 2016, to date of flood 204,000 Based on recent history, Hodge had a gross margin (profit) on Product Tex of 25% of net sales.