Signal Company Uses the Perpetual Inventory Method

Multiple Choice

Signal Company uses the perpetual inventory method. On January 1, 2013, Signal purchased 400 units of inventory that cost $2.00 each. On January 10, 2013, the company purchased an additional 600 units of inventory that cost $2.25 each. If Signal uses a weighted average cost flow method and sells 700 units of inventory for $4.00 each, the amount of gross margin reported on the income statement will be:

A) $1,313.
B) $1,295.
C) $1,225.
D) $1,505.