FUP Guitars purchases guitars from well-known manufacturer in Cebu and sells them at the retail level. The guitars sell, on the average, for P1,500 each. The average cost of a guitar from the manufacturer is P650. The costs that the company incurs in a typical month are shown below:

Cost Cost Formula

Selling:

Advertising P1,250 per month

Delivery of guitar P60 per guitar sold

Sales salaries and commissions P3,500 per month, 5% commissions

Utilities P450 per month

Depreciation of sales facilities P4,000 per month

Administrative:

Executive salaries P15,000 per month

Depreciation of office equipment P900 per month

Clerical P2,500 per month, P20 per guitar sold

Insurance P700 per month

During January, the company sold 75 guitars.

Required:

1. Prepare a traditional income statement for January 2021.
2. Prepare a contribution margin income statement for January 2021.
3. Reconcile the gross profit to the contribution margin and vice versa.