Explain the Purposes, Types, and Uses of Special Journals

question 66

Essay

Explain the purposes, types, and uses of special journals.

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Definitions:

Contribution Margin

The amount by which sales revenue exceeds variable costs. It contributes to covering fixed costs and generates profit.

Fixed Expenses

Costs that do not fluctuate with changes in production level or sales volume.

Variable Expenses

Costs that vary directly with the level of production or sales volume, such as raw materials or sales commissions.

Margin of Safety

The difference between actual sales and the break-even point, indicating the extent to which sales can decline before losses begin.