UNISA MAC3702 — Advanced Management Accounting Exam Bank — 2026/2027
UNISA MAC3702 ADVANCED MANAGEMENT ACCOUNTING
COMPREHENSIVE EXAM BANK
2026/2027 Study Set | 100 Questions | Complete Q&A | Verified Solutions
UNISA School of Accountancy | SAICA/ACCA/CIMA Aligned | Graded A+
Exam Structure: 100 multiple-choice, calculation-based, and scenario questions
Testing Time: 180–240 minutes | Financial/scientific calculator permitted
Passing Score: 50% (50/100 correct); Distinction at 75%+ (75/100 correct)
Core References: Drury, Horngren/Datar/Rajan, Atkinson/Kaplan, SAICA Framework, CIMA Principles
SECTION I: STRATEGIC MANAGEMENT ACCOUNTING (Q1–8)
1. According to Porter's value chain analysis, which of the following is classified as a primary
activity rather than a support activity?
A. Human resource management
B. Firm infrastructure
C. Inbound logistics
D. Technology development
Rationale: Inbound logistics is one of Porter's five primary activities (inbound logistics, operations,
outbound logistics, marketing & sales, service). Human resource management, firm infrastructure,
and technology development are all support activities that underpin the primary value chain.
Understanding this distinction is essential for strategic cost management as primary activities are
directly involved in creating and delivering the product or service.
2. A company following a differentiation strategy invests heavily in brand development,
superior product design, and customer service. Which generic strategy is this company most
likely pursuing according to Porter?
A. Cost leadership
B. Differentiation
C. Focus (cost focus)
D. Integrated cost leadership and differentiation
Rationale: Porter's differentiation strategy involves creating a unique product or service that
customers perceive as superior, justifying a premium price. Heavy investment in branding, design,
and customer service are hallmarks of this approach. Cost leadership focuses on minimizing costs
throughout the value chain, while focus strategies target a narrow market segment. The integrated
approach is notoriously difficult to sustain simultaneously.
3. In the context of strategic management accounting, what is the primary purpose of
conducting a SWOT analysis?
A. To calculate the exact return on investment for each strategic initiative
B. To assess internal strengths and weaknesses alongside external opportunities and
threats to inform strategic decision-making
C. To determine the optimal transfer pricing mechanism between divisions
D. To allocate overhead costs more accurately across product lines
Rationale: SWOT analysis is a strategic planning tool that evaluates internal strengths and
weaknesses alongside external opportunities and threats. It provides a framework for aligning
management accounting information with strategic objectives. It is not a quantitative financial tool
like ROI calculation or cost allocation, but rather a qualitative strategic assessment that guides where
management accounting efforts should be focused.
4. Thandi Ltd. manufactures a single product with the following cost information per unit:
direct materials R80, direct labour R40, variable overhead R20, and fixed manufacturing
overhead R60 (based on normal capacity of 10,000 units). The company sells 10,000 units at
1
, UNISA MAC3702 — Advanced Management Accounting Exam Bank — 2026/2027
R250 each. A competitor enters the market selling a similar product at R200. What is Thandi
Ltd.'s contribution margin per unit if it matches the competitor's price of R200?
A. R200 per unit
B. R60 per unit
C. R80 per unit
D. R100 per unit
Rationale: The contribution margin is calculated as selling price minus variable costs only. At a
price of R200, contribution margin = R200 - R80 - R40 - R20 = R60 per unit. Fixed overhead of R60
per unit is not deducted because it is a period cost that remains unchanged in the short term. The full
cost per unit of R200 means the company would break even on an absorption costing basis, but the
contribution margin of R60 still contributes toward covering fixed costs. This distinction is critical for
strategic pricing decisions.
5. Which of the following best describes how strategic cost management differs from
traditional cost management?
A. Strategic cost management focuses only on manufacturing costs, while traditional cost management
includes all business costs
B. Strategic cost management considers the external competitive environment and value
chain, while traditional cost management focuses internally on cost control and
reduction
C. Traditional cost management uses activity-based costing, while strategic cost management relies
solely on volume-based allocation
D. There is no meaningful difference; the terms are interchangeable
Rationale: Strategic cost management extends beyond internal cost control to incorporate external
competitive analysis, value chain analysis, and strategic positioning. It considers how costs create
value for customers and competitive advantage. Traditional cost management is primarily inward-
looking, focusing on budgeting, variance analysis, and cost reduction within the organization. This
distinction is fundamental to the MAC3702 curriculum.
6. A South African manufacturing company is analyzing its competitive advantage using
Porter's Five Forces framework. If the bargaining power of suppliers is HIGH, which of the
following strategies should management accounting most likely support?
A. Reduce product quality to offset higher input costs
B. Develop supplier alliances, seek alternative suppliers, or consider vertical integration
to reduce dependency
C. Increase selling prices significantly to pass on all cost increases to customers
D. Ignore supplier costs as they are classified as uncontrollable
Rationale: High supplier bargaining power means suppliers can dictate prices or terms,
threatening profitability. Strategic responses include developing long-term supplier partnerships,
diversifying the supplier base, or backward vertical integration (acquiring supplier operations).
Reducing quality harms differentiation, significant price increases may drive away customers, and
classifying costs as uncontrollable ignores strategic cost management's proactive approach to
managing the external environment.
7. Khanya Enterprises is considering strategic repositioning from a cost leadership to a
differentiation strategy. Which of the following management accounting changes would be
MOST critical to support this transition?
A. Reducing the budget allocation for research and development
B. Shifting performance metrics from cost efficiency to innovation, quality, and
customer satisfaction measures
C. Eliminating non-financial performance indicators to focus purely on financial targets
D. Centralizing all decision-making to maintain strict cost control
Rationale: A differentiation strategy requires investment in innovation, quality, and customer
value, so performance measurement must align with these priorities. Shifting metrics to track R&D
effectiveness, defect rates, customer satisfaction scores, and brand equity supports the new strategic
direction. Reducing R&D spending, eliminating non-financial measures, or centralizing control would
contradict differentiation objectives and reinforce a cost leadership mindset.
2
, UNISA MAC3702 — Advanced Management Accounting Exam Bank — 2026/2027
8. In strategic positioning analysis, a company discovers that its value chain costs are 15%
higher than the industry average across most activities, but its product quality and customer
loyalty ratings are significantly above average. Which strategic recommendation is most
appropriate?
A. Immediately switch to a pure cost leadership strategy and cut all quality-related expenditures
B. Maintain the differentiation strategy but identify specific value chain activities where
cost reduction can be achieved without compromising quality
C. Exit the industry as higher costs indicate fundamental competitive weakness
D. Reduce prices to match competitors while maintaining current quality levels
Rationale: The company's above-average quality and customer loyalty suggest its differentiation
strategy is effective, but the cost premium of 15% may be eroding margins. The best approach is
selective cost reduction in non-value-adding activities while preserving quality drivers. Switching to
pure cost leadership would waste the brand equity built, exiting is premature given strong
differentiation, and matching competitor prices without addressing costs would destroy profitability.
SECTION II: PERFORMANCE MEASUREMENT & EVALUATION (Q9–16)
9. Division A has operating income of R500,000, average operating assets of R2,500,000, and
a minimum required rate of return of 12%. The company's cost of capital is 10%. What is the
Economic Value Added (EVA) for Division A?
A. R250,000
B. R200,000
C. R500,000
D. R150,000
Rationale: EVA = Operating Income - (Weighted Average Cost of Capital × Total Capital
Employed). Here, EVA = R500,000 - (10% × R2,500,000) = R500,000 - R250,000 = R200,000. Note
that EVA uses the cost of capital (10%), not the minimum required rate of return (12%) which is used
for Residual Income calculations. The difference between EVA and RI is a common examination trap
— EVA adjusts for the actual cost of capital, often with accounting adjustments for distortions.
10. Mandla Manufacturing has two divisions. Division X has an ROI of 22% with average
operating assets of R4,000,000. Division Y has an ROI of 18% with average operating assets
of R6,000,000. Both divisions are considering a new project requiring an investment of
R1,000,000 with expected annual income of R190,000 (project ROI = 19%). The company's
minimum required rate of return is 15%. If divisional managers are evaluated solely on ROI,
which division(s) will accept the project?
A. Both Division X and Division Y
B. Only Division X
C. Only Division Y
D. Neither division
Rationale: When evaluated on ROI, managers will only accept projects that increase their current
ROI. Division X's current ROI is 22%, and the new project ROI of 19% would lower it, so Division X
would reject it. Division Y's current ROI is 18%, and the new project ROI of 19% would increase it, so
Division Y would accept it. This is the well-known sub-optimality problem with ROI evaluation — a
project earning 19% exceeds the 15% hurdle rate and is value-adding, but Division X rejects it due to
ROI's averaging effect.
11. A division has operating income of R300,000, average operating assets of R2,000,000,
and the company's required rate of return is 12%. What is the division's Residual Income?
A. R36,000
B. R60,000
C. R264,000
D. R540,000
Rationale: Residual Income = Operating Income - (Required Rate of Return × Average Operating
Assets) = R300,000 - (12% × R2,000,000) = R300,000 - R240,000 = R60,000. Residual Income
measures the absolute amount of profit earned above the required minimum return, avoiding the ROI
problem where profitable projects might be rejected for lowering the division's average ROI.
3
UNISA MAC3702 ADVANCED MANAGEMENT ACCOUNTING
COMPREHENSIVE EXAM BANK
2026/2027 Study Set | 100 Questions | Complete Q&A | Verified Solutions
UNISA School of Accountancy | SAICA/ACCA/CIMA Aligned | Graded A+
Exam Structure: 100 multiple-choice, calculation-based, and scenario questions
Testing Time: 180–240 minutes | Financial/scientific calculator permitted
Passing Score: 50% (50/100 correct); Distinction at 75%+ (75/100 correct)
Core References: Drury, Horngren/Datar/Rajan, Atkinson/Kaplan, SAICA Framework, CIMA Principles
SECTION I: STRATEGIC MANAGEMENT ACCOUNTING (Q1–8)
1. According to Porter's value chain analysis, which of the following is classified as a primary
activity rather than a support activity?
A. Human resource management
B. Firm infrastructure
C. Inbound logistics
D. Technology development
Rationale: Inbound logistics is one of Porter's five primary activities (inbound logistics, operations,
outbound logistics, marketing & sales, service). Human resource management, firm infrastructure,
and technology development are all support activities that underpin the primary value chain.
Understanding this distinction is essential for strategic cost management as primary activities are
directly involved in creating and delivering the product or service.
2. A company following a differentiation strategy invests heavily in brand development,
superior product design, and customer service. Which generic strategy is this company most
likely pursuing according to Porter?
A. Cost leadership
B. Differentiation
C. Focus (cost focus)
D. Integrated cost leadership and differentiation
Rationale: Porter's differentiation strategy involves creating a unique product or service that
customers perceive as superior, justifying a premium price. Heavy investment in branding, design,
and customer service are hallmarks of this approach. Cost leadership focuses on minimizing costs
throughout the value chain, while focus strategies target a narrow market segment. The integrated
approach is notoriously difficult to sustain simultaneously.
3. In the context of strategic management accounting, what is the primary purpose of
conducting a SWOT analysis?
A. To calculate the exact return on investment for each strategic initiative
B. To assess internal strengths and weaknesses alongside external opportunities and
threats to inform strategic decision-making
C. To determine the optimal transfer pricing mechanism between divisions
D. To allocate overhead costs more accurately across product lines
Rationale: SWOT analysis is a strategic planning tool that evaluates internal strengths and
weaknesses alongside external opportunities and threats. It provides a framework for aligning
management accounting information with strategic objectives. It is not a quantitative financial tool
like ROI calculation or cost allocation, but rather a qualitative strategic assessment that guides where
management accounting efforts should be focused.
4. Thandi Ltd. manufactures a single product with the following cost information per unit:
direct materials R80, direct labour R40, variable overhead R20, and fixed manufacturing
overhead R60 (based on normal capacity of 10,000 units). The company sells 10,000 units at
1
, UNISA MAC3702 — Advanced Management Accounting Exam Bank — 2026/2027
R250 each. A competitor enters the market selling a similar product at R200. What is Thandi
Ltd.'s contribution margin per unit if it matches the competitor's price of R200?
A. R200 per unit
B. R60 per unit
C. R80 per unit
D. R100 per unit
Rationale: The contribution margin is calculated as selling price minus variable costs only. At a
price of R200, contribution margin = R200 - R80 - R40 - R20 = R60 per unit. Fixed overhead of R60
per unit is not deducted because it is a period cost that remains unchanged in the short term. The full
cost per unit of R200 means the company would break even on an absorption costing basis, but the
contribution margin of R60 still contributes toward covering fixed costs. This distinction is critical for
strategic pricing decisions.
5. Which of the following best describes how strategic cost management differs from
traditional cost management?
A. Strategic cost management focuses only on manufacturing costs, while traditional cost management
includes all business costs
B. Strategic cost management considers the external competitive environment and value
chain, while traditional cost management focuses internally on cost control and
reduction
C. Traditional cost management uses activity-based costing, while strategic cost management relies
solely on volume-based allocation
D. There is no meaningful difference; the terms are interchangeable
Rationale: Strategic cost management extends beyond internal cost control to incorporate external
competitive analysis, value chain analysis, and strategic positioning. It considers how costs create
value for customers and competitive advantage. Traditional cost management is primarily inward-
looking, focusing on budgeting, variance analysis, and cost reduction within the organization. This
distinction is fundamental to the MAC3702 curriculum.
6. A South African manufacturing company is analyzing its competitive advantage using
Porter's Five Forces framework. If the bargaining power of suppliers is HIGH, which of the
following strategies should management accounting most likely support?
A. Reduce product quality to offset higher input costs
B. Develop supplier alliances, seek alternative suppliers, or consider vertical integration
to reduce dependency
C. Increase selling prices significantly to pass on all cost increases to customers
D. Ignore supplier costs as they are classified as uncontrollable
Rationale: High supplier bargaining power means suppliers can dictate prices or terms,
threatening profitability. Strategic responses include developing long-term supplier partnerships,
diversifying the supplier base, or backward vertical integration (acquiring supplier operations).
Reducing quality harms differentiation, significant price increases may drive away customers, and
classifying costs as uncontrollable ignores strategic cost management's proactive approach to
managing the external environment.
7. Khanya Enterprises is considering strategic repositioning from a cost leadership to a
differentiation strategy. Which of the following management accounting changes would be
MOST critical to support this transition?
A. Reducing the budget allocation for research and development
B. Shifting performance metrics from cost efficiency to innovation, quality, and
customer satisfaction measures
C. Eliminating non-financial performance indicators to focus purely on financial targets
D. Centralizing all decision-making to maintain strict cost control
Rationale: A differentiation strategy requires investment in innovation, quality, and customer
value, so performance measurement must align with these priorities. Shifting metrics to track R&D
effectiveness, defect rates, customer satisfaction scores, and brand equity supports the new strategic
direction. Reducing R&D spending, eliminating non-financial measures, or centralizing control would
contradict differentiation objectives and reinforce a cost leadership mindset.
2
, UNISA MAC3702 — Advanced Management Accounting Exam Bank — 2026/2027
8. In strategic positioning analysis, a company discovers that its value chain costs are 15%
higher than the industry average across most activities, but its product quality and customer
loyalty ratings are significantly above average. Which strategic recommendation is most
appropriate?
A. Immediately switch to a pure cost leadership strategy and cut all quality-related expenditures
B. Maintain the differentiation strategy but identify specific value chain activities where
cost reduction can be achieved without compromising quality
C. Exit the industry as higher costs indicate fundamental competitive weakness
D. Reduce prices to match competitors while maintaining current quality levels
Rationale: The company's above-average quality and customer loyalty suggest its differentiation
strategy is effective, but the cost premium of 15% may be eroding margins. The best approach is
selective cost reduction in non-value-adding activities while preserving quality drivers. Switching to
pure cost leadership would waste the brand equity built, exiting is premature given strong
differentiation, and matching competitor prices without addressing costs would destroy profitability.
SECTION II: PERFORMANCE MEASUREMENT & EVALUATION (Q9–16)
9. Division A has operating income of R500,000, average operating assets of R2,500,000, and
a minimum required rate of return of 12%. The company's cost of capital is 10%. What is the
Economic Value Added (EVA) for Division A?
A. R250,000
B. R200,000
C. R500,000
D. R150,000
Rationale: EVA = Operating Income - (Weighted Average Cost of Capital × Total Capital
Employed). Here, EVA = R500,000 - (10% × R2,500,000) = R500,000 - R250,000 = R200,000. Note
that EVA uses the cost of capital (10%), not the minimum required rate of return (12%) which is used
for Residual Income calculations. The difference between EVA and RI is a common examination trap
— EVA adjusts for the actual cost of capital, often with accounting adjustments for distortions.
10. Mandla Manufacturing has two divisions. Division X has an ROI of 22% with average
operating assets of R4,000,000. Division Y has an ROI of 18% with average operating assets
of R6,000,000. Both divisions are considering a new project requiring an investment of
R1,000,000 with expected annual income of R190,000 (project ROI = 19%). The company's
minimum required rate of return is 15%. If divisional managers are evaluated solely on ROI,
which division(s) will accept the project?
A. Both Division X and Division Y
B. Only Division X
C. Only Division Y
D. Neither division
Rationale: When evaluated on ROI, managers will only accept projects that increase their current
ROI. Division X's current ROI is 22%, and the new project ROI of 19% would lower it, so Division X
would reject it. Division Y's current ROI is 18%, and the new project ROI of 19% would increase it, so
Division Y would accept it. This is the well-known sub-optimality problem with ROI evaluation — a
project earning 19% exceeds the 15% hurdle rate and is value-adding, but Division X rejects it due to
ROI's averaging effect.
11. A division has operating income of R300,000, average operating assets of R2,000,000,
and the company's required rate of return is 12%. What is the division's Residual Income?
A. R36,000
B. R60,000
C. R264,000
D. R540,000
Rationale: Residual Income = Operating Income - (Required Rate of Return × Average Operating
Assets) = R300,000 - (12% × R2,000,000) = R300,000 - R240,000 = R60,000. Residual Income
measures the absolute amount of profit earned above the required minimum return, avoiding the ROI
problem where profitable projects might be rejected for lowering the division's average ROI.
3
