Reference no: EM133110546

Question - Hot Locks Company developed the following information for its' hair dryer sales:

Sales price	$60.00 per unit
Variable cost of goods sold	$20.00 per unit
Fixed cost of goods sold	$106,000
Variable selling expense	10% of sales price
Variable administrative expense	$0.25 per unit
Fixed selling expense	$9,000
Fixed administrative expense	$3,000

For the year ended December 31, 2020, Hot Locks Company produced and sold 10,000 hair dryers:

Required -

a) Prepare a Cost Volume Profit (CVP) income statement using the contribution margin format for Hot Locks Company for 2020.

b) Briefly explain how the CVP income statement differs from the traditional GAAP income statement.