Binders $5.8 million cost of inventory at the end of last year was understated by $1.7 million.

Question:

Binders $5.8 million cost of inventory at the end of last year was understated by $1.7 million.
1. Was last years reported gross profit of $3.8 million overstated, understated, or correct? What was the correct amount of gross profit last year?
2. Is this year’s gross profit of $5.5 million overstated, understated, or correct? What is the correct amount of gross profit for the current year?