Rohan, Eva, and Matt (REM) went into business to help people improve their sleep. The firm operates in the Overlook Hotel near the Rocky Mountains. After the first year of operations (12/31), the balance sheet had the following information:

REM LLC
Balance Sheet
December 31, Year 1
Assets
Cash	$	35,000
Account receivable		40,000
Inventory		25,000
Plant and equipment, net of depreciation		300,000
Total assets	$	400,000
Liabilities and stockholders' equity
Accounts payable	$	30,000
Notes payable		50,000
Capital stock, no par		200,000
Retained earnings		120,000
Total liabilities and stockholder's equity	$	400,000

In anticipation of preparing the company's operating budget for the upcoming period, the company's accountant has gathered the following information:

1. (a) December Year 1 sales were $220,000. Sales are expected to grow at a rate of 8% per month. Half of all sales are for cash and half are on account.

2. (b) Inventory purchases are expected to total $100,000 during January, and the inventory account is expected to have a $28,000 balance at January 31, Year 2. All inventory purchases are on account.

3. (c) Selling and administrative expenses for January Year 2 are budgeted at $60,000 (exclusive of depreciation) plus 10% of sales. Selling and administrative expenses are paid in cash. Depreciation is budgeted at $3,000 for the month.

4. (d) The notes payable will be paid in January, Year 2. The amount due will be $50,500. The $500 represents interest expense for the month of January, Year 2.

5. (e) The company expects to purchase a new machine during January Year 2 at a cost of $5,000.

Required:

What is the gross margin for the month ending January 31, year 2?