MAC3761 EXAM PACK STUDY GUIDE 2025/2026 VERIFIED
QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONALES || 100% GUARANTEED PASS <LATEST
VERSION>
MAC3761 EXAM PACK STUDY GUIDE 2025/2026
1. What is the primary objective of management accounting?
To provide financial and non-financial information to managers for planning, controlling,
and decision-making within the organization.
2. How does management accounting differ from financial accounting in terms of its primary
users?
Management accounting serves internal users (managers), while financial accounting serves
external users (shareholders, creditors).
3. What are the three main ethical considerations for a management accountant according to
the IMA?
Competence, Confidentiality, Integrity, and Credibility.
,4. Define a cost object with two examples.
Anything for which a cost measurement is desired. Examples: A product, a service, a project,
a department.
5. Distinguish between a direct cost and an indirect cost.
A direct cost can be conveniently and economically traced to a cost object. An indirect cost
cannot be conveniently or economically traced and is allocated.
6. What is the difference between a variable cost and a fixed cost?
A variable cost changes in total in proportion to changes in the level of activity. A fixed cost
remains unchanged in total for a given time period despite changes in the level of activity.
7. Why is the distinction between product costs and period costs important for financial
reporting?
Product costs are inventoried and become COGS only when the product is sold. Period costs
are expensed in the period they are incurred, affecting the income statement immediately.
8. Calculate total manufacturing costs given: Direct Materials R50,000, Direct Labour R30,000,
Manufacturing Overhead R20,000.
R100,000.
9. Calculate Cost of Goods Manufactured (COGM) using: Beginning WIP R10,000, Total
Manufacturing Costs R100,000, Ending WIP R15,000.
R95,000.
, 10. Calculate Cost of Goods Sold (COGS) using: Beginning Finished Goods R20,000, COGM
R95,000, Ending Finished Goods R25,000.
R90,000.
11. What is the fundamental cost flow equation for inventory accounts?
Beginning Balance + Additions = Ending Balance + Withdrawals.
12. What is the primary purpose of an overhead cost allocation base?
To link indirect costs to cost objects in a systematic way. It should be a cost driver that
causes the overhead.
13. Why is the use of a single plant-wide overhead rate often considered inaccurate?
It assumes all overhead costs are driven by a single factor (e.g., direct labour hours), which
ignores the diversity of activities and cost drivers in a modern factory.
14. Describe the two-stage allocation process in Activity-Based Costing (ABC).
Stage 1: Overhead costs are assigned to activity cost pools. Stage 2: Costs in each activity
pool are allocated to cost objects using a separate cost-allocation base (activity driver).
15. What is an activity cost driver in an ABC system?
A factor that causes the cost of an activity to change. It is the basis used to assign activity
costs to cost objects.
16. List two limitations of implementing an Activity-Based Costing system.
It can be costly to implement and maintain. The benefits may not justify the costs for some
companies.
QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONALES || 100% GUARANTEED PASS <LATEST
VERSION>
MAC3761 EXAM PACK STUDY GUIDE 2025/2026
1. What is the primary objective of management accounting?
To provide financial and non-financial information to managers for planning, controlling,
and decision-making within the organization.
2. How does management accounting differ from financial accounting in terms of its primary
users?
Management accounting serves internal users (managers), while financial accounting serves
external users (shareholders, creditors).
3. What are the three main ethical considerations for a management accountant according to
the IMA?
Competence, Confidentiality, Integrity, and Credibility.
,4. Define a cost object with two examples.
Anything for which a cost measurement is desired. Examples: A product, a service, a project,
a department.
5. Distinguish between a direct cost and an indirect cost.
A direct cost can be conveniently and economically traced to a cost object. An indirect cost
cannot be conveniently or economically traced and is allocated.
6. What is the difference between a variable cost and a fixed cost?
A variable cost changes in total in proportion to changes in the level of activity. A fixed cost
remains unchanged in total for a given time period despite changes in the level of activity.
7. Why is the distinction between product costs and period costs important for financial
reporting?
Product costs are inventoried and become COGS only when the product is sold. Period costs
are expensed in the period they are incurred, affecting the income statement immediately.
8. Calculate total manufacturing costs given: Direct Materials R50,000, Direct Labour R30,000,
Manufacturing Overhead R20,000.
R100,000.
9. Calculate Cost of Goods Manufactured (COGM) using: Beginning WIP R10,000, Total
Manufacturing Costs R100,000, Ending WIP R15,000.
R95,000.
, 10. Calculate Cost of Goods Sold (COGS) using: Beginning Finished Goods R20,000, COGM
R95,000, Ending Finished Goods R25,000.
R90,000.
11. What is the fundamental cost flow equation for inventory accounts?
Beginning Balance + Additions = Ending Balance + Withdrawals.
12. What is the primary purpose of an overhead cost allocation base?
To link indirect costs to cost objects in a systematic way. It should be a cost driver that
causes the overhead.
13. Why is the use of a single plant-wide overhead rate often considered inaccurate?
It assumes all overhead costs are driven by a single factor (e.g., direct labour hours), which
ignores the diversity of activities and cost drivers in a modern factory.
14. Describe the two-stage allocation process in Activity-Based Costing (ABC).
Stage 1: Overhead costs are assigned to activity cost pools. Stage 2: Costs in each activity
pool are allocated to cost objects using a separate cost-allocation base (activity driver).
15. What is an activity cost driver in an ABC system?
A factor that causes the cost of an activity to change. It is the basis used to assign activity
costs to cost objects.
16. List two limitations of implementing an Activity-Based Costing system.
It can be costly to implement and maintain. The benefits may not justify the costs for some
companies.
