Cinnabar Construction Company has consistently used the input method based on costs incurred to recognize revenue from a performance obligation satisfied over time. During Year 1, Cinnabar entered into a fixed-price contract to construct an office building for $10 million. Information relating to the contract is as follows:

	December 31
	Year 1		Year 2
Progress to completion	20%		60%
Estimated total costs
at completion	$7,500,000		$8,000,000
Gross profit recognized
(cumulative)	500,000		1,200,000

Contract costs incurred during Year 2 were

• A.$3,500,000

• B.$3,300,000

• C.$3,200,000

• D.$4,800,000