please explain

3. In Year 1, a contractor agrees to build a building for $1,675,000 by the end of year 2. The builder's cost is estimated to be $1,225,000. The actual costs in Year 1 are $575,000 and Year 2's actual costs are $700,000. Under the completed contract method, the gross profit for Year 1 is A) SO. B) $300,000. C) $450,000. D) $700,000