On April 1, 2006, Pine Construction Company entered into a fixed price contract to construct an apartment building for $6,000,000. Pine appropriately accounts for this contract under the percentage of completion method. Information relating to the contract is as follows:
|
At December 31, 2006 |
At December 31, 2007 |
|
|
Percentage of completion |
20% |
60% |
|
Estimated costs at completion |
$4,500,000 |
$4,800,000 |
|
Income recognized (cumulative) |
$300,000 |
$720,000 |
What is the amount of contract costs incurred during the year ended December 31, 2007?
a. $1,200,000
b. $1,920,000
c. $1,980,000
d. $2,880,000