In Year 1 a Contractor Agrees to Build a Building

Multiple Choice

In year 1 a contractor agrees to build a building for $2,500,000 by the end of year 2. The builder's cost is estimated to be $1,800,000. The actual costs year 1 are $900,000 and year 2's actual costs are $1,100,000. Under the percentage of completion method year 2's gross profit is

A) $500,000.
B) $350,000.
C) $700,000.
D) $150,000.