Gross margin

That is cost of revenue divided by revenue, not gross profit divided by revenue.

Dividing gross profit by cost of revenue uses the wrong denominator.

Gross profit is $380 thousand ($1,000 − $620). $380 ÷ $1,000 = 38%.

This divides revenue by cost of revenue. Gross margin uses gross profit divided by revenue.

Answer: c

Gross profit is $380 thousand ($1,000 − $620). $380 ÷ $1,000 = 38%.