Revenue from inventory turnover and gross margin Steps:

• Average inventory = ($40,000 +$20,000) / 2 = $30,000
• COGS = inventory turnover × average inventory = 20 × $30,000 =$600,000
• Gross margin of 25% means COGS is 75% of revenue
• Revenue = COGS / 0.75 = $600,000 / 0.75 =$800,000

Why B is correct:

• Revenue = COGS / (1 - gross margin), where gross margin is sales profit percentage, so $600,000 / 0.75 =$800,000

Why the others are wrong:

• A: Uses 80% COGS ratio ($600,000 / 0.80 =$750,000), ignoring 25% margin
• C: Uses 66.67% COGS ratio ($600,000 / 0.6667 ≈$900,000), misapplying margin
• D: Uses 60% COGS ratio ($600,000 / 0.60 =$1,000,000), understating COGS share

Final answer: B