Sanchez Company engaged in the following transactions during Year 1:

1. 1) Started the business by issuing $12,500 of common stock for cash.

2. 2) The company paid cash to purchase $7,600 of inventory.

3. 3) The company sold inventory that cost $5,000 for $10,150 cash.

4. 4) Operating expenses incurred and paid during the year, $4,500.

Sanchez Company engaged in the following transactions during Year 2:

1. 1) The company paid cash to purchase $10,800 of inventory.

2. 2) The company sold inventory that cost $9,200 for $16,750 cash.

3. 3) Operating expenses incurred and paid during the year, $5,500.

Note: Sanchez uses the perpetual inventory system.

Sanchez's gross margin for the Year 2 is:

A. $5950

B. $2050

C. $9200

D. $7550