Faber Company was contracted to construct the Acme Building at a total contract price of $40,000,000.

The company uses the percentage of completion method and anticipated a 10 percent gross profit on January 1, Year 1, the date the contract began.

At December 31, Year 2, the company had recognized $1,200,000 in inception to date profit.

Assuming the job was 40 percent complete, by what amount had total estimated project costs increased?

A. $1,200,000 B. $800,000 C. $1,600,000 D. $1,000,000