Carmichael Construction Group contracted to construct a building for $1,800,000. Construction began in 2010 and was completed in 2011. Data relating to the contract are summarized below:

Year ended

December 31,

2010 2011

Costs incurred $600,000 $450,000

Estimated costs to complete 400,000

Carmichael uses the percentage-of-completion method as the basis for income recognition. For the years ended December 31, 2010, and 2011, respectively, Reese should report gross profit of

a. $270,000 and $480,000.

b. $480,000 and $270,000.

c. $1,080,000 and $720,000.

d. $0 and $750,000.