Final answer:
The key difference between traditional and CVP income statements is that the traditional combines both fixed and variable costs, whereas the CVP separates them, making it easier to analyze the impact of volume changes on profitability.
Step-by-step explanation:
When comparing a traditional income statement to a CVP (Cost-Volume-Profit) income statement, the main differences lie in how costs are categorized and presented. In a traditional income statement, both fixed and variable costs are combined and presented alongside each other under the general heading of operating expenses. This format provides a traditional view of profitability. On the other hand, a CVP income statement separates fixed costs from variable costs explicitly, providing a clearer view of how costs change with levels of production or sales volume. Therefore, option 3 from the student's question is correct: the traditional income statement includes both fixed and variable costs, while the CVP income statement separates them. It is important to note that both types of income statements include revenue, contrary to what is suggested in option 4.