Sanchez Company engaged in the following transactions during Year 1:

1) Started the business by issuing $11,500 of common stock for cash.

2) The company paid cash to purchase $7,100 of inventory.

3) The company sold inventory that cost $4,500 for $8,900 cash.

4) Operating expenses incurred and paid during the year, $4,000.

Sanchez Company engaged in the following transactions during Year 2:

1) The company paid cash to purchase $9,800 of inventory.

2) The company sold inventory that cost $8,700 for $15,500 cash.

3) Operating expenses incurred and paid during the year, $5,000.

Note: Sanchez uses the perpetual inventory system.

What is Sanchez's gross margin for Year 2?