Association of Chartered Certified Accountants (ACCA) Certification Practice Test

How can ineffective time management impact costs?

1. It can reduce costs significantly

2. It has no impact on costs

3. It can increase costs

4. It will only affect labor costs

The correct answer is: It can increase costs

Ineffective time management can lead to an increase in costs for several reasons. When time is not managed properly, tasks may take longer to complete than necessary, leading to the potential for project delays. These delays can frustrate clients and result in lost business or the need for companies to expedite projects, often incurring higher costs. Additionally, poor time management may result in resource allocation issues. If employees are not organized or do not prioritize their tasks effectively, they may end up working inefficiently, which can contribute to increased labor costs. This inefficiency can also lead to the overuse of materials or unnecessary overtime, further driving up expenses. Furthermore, the knock-on effect of missed deadlines can disrupt other interconnected processes or operations within a business, causing additional costs, such as penalties for late delivery or the need to pay for expedited shipping or increased operational costs due to interruptions. Overall, the cumulative effect of these factors illustrates how ineffective time management can indeed result in increased costs across various areas of a business, making the chosen answer valid.