Stubbs Company uses the perpetual inventory method. On January 1, Year 1, Stubbs purchased 700 units of inventory that cost $5.00 each. On January 10, Year 1, the company purchased an additional 600 units of inventory that cost $3.75 each. If Stubbs uses a weighted average cost flow method and sells 1,000 units of inventory for $10.00 each, the amount of gross margin reported on the income statement will be: (Round your intermediate calculations to two decimal places.)

Multiple Choice

• $5,746.

• $5,580.

• $8,125.

• $7,250.