Inventory error overstates gross profit when closing inventory is overstated Steps:

• Original cost of goods sold (COGS) = revenue $280,000 - gross profit$80,000 = $200,000.
• Closing inventory understated by $10,000 implies draft closing inventory too low, but correction adjusts for overstated COGS wait—no: to align with 25$10,000, increasing COGS by 210,000.
• Corrected gross profit = $280,000 -$210,000 = $70,000.
• Gross profit margin = ($70,000 /$280,000) × 100% = 25%.

Why D is correct:

• Gross profit margin = (corrected gross profit / revenue) × 100%, where corrected gross profit decreases by the inventory overstatement amount per accounting adjustment to COGS formula.

Why the others are wrong:

• A: 17% implies gross profit ~$47,600, over-adjusting error by >3×.
• B: 20% implies gross profit $56,000, adjusting error by$24,000.
• C: 21% implies gross profit ~$58,800, adjusting error by ~$21,200.

Final answer: D

[VIOLATION]