Question: XYZ Ltd. uses a predetermined overhead rate based on direct labor hours. The budgeted manufacturing overhead costs for the year are $300,000, and the company

XYZ Ltd. uses a predetermined overhead rate based on direct labor hours. The budgeted manufacturing overhead costs for the year are $300,000, and the company expects to use 25,000 direct labor hours. However, actual direct labor hours worked during the year were 23,000. Calculate the overhead volume variance and assess its implications for capacity utilization and cost management.

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