Wrycooder Guitars is a manufacturer of one standard type of guitar. Its recent budgetary report for its assembly department for October 2004 is as follows:

Indicate the weaknesses of the cost report presented above and explain how it could be improved.

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Department: Assembly Annual output: 24000 guitars Month: October 2004 (Month 7) This month's output: 2300 guitars Annual budget Month's budget Actuals Variances Cost element () () () () Labour 240,000 20,000 21,340 1,340 A Materials 480,000 40,000 46,500 6,500 A Power 12,000 1,000 1,100 100 A Depreciation 96,000 8,000 8,000 0 Totals 828,000 69,000 76,940 7,940 A